The New

Geopolitics
of Southeast
Asia

SPECIALREPORT
SR015 November 2012
 IDEAS Special Reports are unique one-off
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IDEAS Reports Editor

LSE IDEAS is a centre for the study of international
Dr Nicholas Kitchen affairs, diplomacy and grand strategy. Its mission
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Cover image credits:

Portrait of Hu Jintao
http://en.wikipedia.org/wiki/Hu_Jintao

Official Portrait of Barack Obama

by Pete Souza, The Obama-Biden Transition Project
http://change.gov/newsroom/entry/
new_official_portrait_released/

Perry-Castañeda Library Map Collection

http://www.lib.utexas.edu/maps/asia.html

2
 Contents
SR015 November 2012

Executive Summary 6
Nicholas Kitchen, Editor, IDEAS Reports

The Clash

Indispensable Nation?
The United States in Southeast Asia 9
Michael Cox

China and Southeast Asia 16

Odd Arne Westad

Southeast Asia between China and the United States 21

Munir Majid

The Theatre of Competition

Indochina (Vietnam, Cambodia, Laos) 37

Ang Cheng Guan

Indonesia 42
Rizal Sukma

Malaysia 47
Johan Saravanamuttu

Myanmar 53
Jürgen Haacke

The Philippines 61
Emmanuel Yujuico

Singapore 67
Robyn Klingler Vidra

Thailand 74
Thitinan Pongsudhirak

Conclusion: The Regional Dynamic

Forging a Regional Response 81

Munir Majid
 Contributors
MICHAEL COX is Founding Director of LSE IDEAS, Emeritus Professor of International Relations at the
LSE where he is Academic Director of the Masters in International Strategy and Diplomacy, LSE Summer
School, and the LSE-Peking University Summer School in Beijing. He is Chair of the LSE100 Steering
Committee and a faculty member on the TRIUM Masters in Business Administration. His most recent
books include US Foreign Policy (2nd edition 2012), Introduction to International Relations (2012) and
From Theodore Roosevelt to Barack Obama: US Presidents and the Promotion of Democracy (2012).

ANG CHENG GUAN is Associate Professor at the Nanyang Technological University, Singapore.
He specialises in the International history of modern Southeast Asia. His most recent book is Southeast
Asia and the Vietnam War (London: Routledge, 2010). He is the author of two forthcoming books:
Lee Kuan Yew’s Strategic Thought and Singapore, ASEAN and the Cambodian Conflict 1978-1991.

JÜRGEN HAACKE is Senior Lecturer in the Department of International Relations at the LSE. His
publications include Myanmar’s Foreign Policy: Domestic Influences and International Implications
(Routledge for IISS, 2006) and ASEAN’s Diplomatic and Security Culture: Origins, Development and
Prospects (Routledge, 2003). He is also the co-editor of Cooperative Security in the Asia-Pacific: The
ASEAN Regional Forum (Routledge, 2010).

TAN SRI MUNIR MAJID is Visiting Senior Fellow in the Southeast Asia International Affairs Programme
at LSE IDEAS. Dr. Majid is the founding chairman of the Malaysian securities commission (1993-99)
when he was also chairman of the emerging markets committee of IOSCO (International Organisation
of Securities Commission).

THITINAN PONGSIDURAK is director of the Institute of Security and International Studies, in the
Faculty of Political Science, Chulalongkorn University.

JOHAN SARAVANAMUTTU is a Visiting Senior Research Fellow at the Institute of Southeast Asian
Studies, Singapore.

RIZAL SUKMA is Executive Director at the Centre for Strategic and International Studies (CSIS), Jakarta.
He received his PhD in International Relations from the London School of Economics and Political Science
(LSE) in 1997.

ROBYN KLINGLER VIDRA is a PhD candidate at the LSE, researching the role of East Asian states,
particularly Singapore, Taiwan, Hong Kong and Vietnam, in market building. She helps teach an
undergraduate course on international political economy and leads executive education courses on
capital markets and sovereign debt management.

ODD ARNE WESTAD is Professor of International History at LSE and Co-Director of LSE IDEAS. His most
recent book is Restless Empire: China and the World since 1750, published this year by Basic Books
(New York) and Bodley Head (London).

EMMANUEL YUJUICO is a visiting instructor in political economy at the Philippines’ University of Asia
and the Pacific. He is also a research fellow in Southeast Asia International Affairs for LSE IDEAS.

4
The New
Geopolitics of
Southeast Asia

5
 Executive Summary
Nicholas Kitchen, Editor, IDEAS Reports

Southeast Asia has long been a crucially important region in world politics. The Cold War may have
begun and ended in Europe, but it was waged most fiercely in Southeast Asia. As what one senior
American official described as the United States’ ‘Middle East detour’ comes to an end, there is a
renewed recognition globally that developments in Asia will determine the landscape of international
politics over the coming decades.

The source of that certainty, of course, is the unprecedented economic rise of China, which is likely
to become the world’s largest economy in the next twenty years in a world where interdependence
increasingly sees imperatives of geoeconomics trump issues of geopolitics. China has made immense
progress over the last thirty years in forging new economic links with a region that it was previously
estranged from. In its support for the region during the 1997-8 economic crisis and in its substantive
cooperation with ASEAN, China has convinced regional states of its benign economic goals. Nonetheless,
in Southeast Asia the ‘great game’ of geopolitics is alive and well, even resurgent. Territorial disputes in
the South China Sea pit regional states against an intransigent Beijing, even as they become increasingly
economically dependent on China. The much-vaunted American ‘pivot’ to the region – Washington’s
effort to ‘rebalance’ its foreign policy to focus on the preeminent strategic challenge posed by China’s
rise – allows regional states to hedge against China’s more opaque intentions. At the same time, America’s
return to the region it left in helicopters from the roof of its embassy in Saigon, provokes suspicions of
its deeper purpose, not least in Beijing.

In all this, Southeast Asian states risk becoming pawns in a geopolitical clash between the two extra-
regional superpowers. This report analyses how the states in the region are responding to the challenge
posed by the strategic interests of the US and China in their geography and economy. The contributors
here find that most take a more benign view of Washington’s intentions than they do Beijing’s. Most
regional states, too, see opportunity in being the object of the superpowers’ interest. Yet there is an
inherent danger in these countries wanting to have their cake and eat it too, in that the desire for bilateral
gains with the superpowers may carry the cost of sacrificing wider regional interests. Already, ASEAN
unity has cracked under the pressure exerted by the new geopolitics of extra-regional contestation, as for
the first time in the organisation’s history, ASEAN foreign ministers failed to agree a joint communique
following their Phnom Penh meeting earlier this year.

6
To take advantage of the opportunities presented by
China’s rise and the United States’ pivot, Southeast
Asian states need to stand together in the geopolitical
contest currently taking place in the region. This is no
easy task: regional states are caught in what game
theory would view as a classic ‘prisoners’ dilemma’ that
will require a deep degree of trust to escape. Yet it is
only by avoiding the short-term gains of bilateralism
and renewing regional multilateral structures that
Southeast Asian states will be able to avoid being
ultimately subsumed by the clashing superpowers.

ASEAN represents a market of over half a billion

people, with a combined GDP growth currently double
the global average. Yet its consensual approach to
fostering regional economic integration leaves it ill-
equipped to lead in the task of forging a regional
strategy. ASEAN therefore requires reform and renewal
to enable it serve as a third pole in the new geopolitics
of Southeast Asia, with the capacity and authority
to mitigate the strategic contest between China and
the US. Failure to do so will mean surrendering the
future of the region to the geopolitical interests of
extra-regional powers. The alternative is for regional
member states themselves to empower ASEAN to
represent their collective strategic interests, and for
Southeast Asia to forge a Southeast Asian future. ■

7
 The Clash

8
Indispensable Nation?
The United States in East Asia
Michael Cox

A t the end of World War II the United States faced three historic tasks: to recreate the
conditions that would over time lead to the reconstitution of an open world economic
system; to limit, and where possible, defeat the ambitions of those who after 1945 were
pressing to push the world in a radically different direction to that favoured by America and
its market allies; and finally, to incorporate old enemy states like Germany and Japan into an
American-led international order.

In order to achieve these goals the United States possessed at least two assets: a confident world view
born out of success in a war that left it with massive global reach and a vast amount of power. That
said, the challenges it confronted were enormous – nowhere more so than in Asia. Here a brutal war
had not only devastated most countries in the region; only four years after Japan’s humiliating exit from
the war, an authentic revolution actually occurred in arguably the most critical of all Asian countries:
namely China. Whether or not the causes of communist success in China were the result of brilliant
organisation, peasant discontent, the successful manipulation of nationalist sentiment or the backing
of communist USSR (or a combination of all four) has long been debated by different generations of
historians. Few though would dispute the hugely disturbing impact that the communist revolution in China
was to have upon the wider Asian region. Nor could there be any doubt either about the implications
of the Chinese communist revolution for the conduct of US foreign policy over the next three decades.
Indeed, Mao Tse-Tung’s particular brand of revolutionary communism not only brought the Cold War
to Asia and guaranteed a permanent American presence in the region that endures to this day; it was
also the root of the United States’ decisions to intervene militarily on at least two occasions: first in
Korea between 1950 and 1953, and then later in Vietnam, in an extended conflict that finally ended
in America’s most humiliating defeat. If the Cold War remained cold in other parts of the world it was
anything but in Asia.

This essay traces what in global terms must be seen as one of the great transformations of the modern
era: that which turned one of the most devastated and disturbed regions in the world after mid-century
into one of the more stable and prosperous by century’s end. The process of transition did not occur
overnight. Nor did it occur without a mighty struggle between competing ideologies and rival states.
But in the end, Asia – a most fiercely contested region for well over fifty years – underwent a massive
change and did so, in part, because of the role played by the United States. Of course this came at a
very high price in terms of lives lost, blood expended and democratic possibilities abandoned. Still, if the
measure of success for any great power is the creation of an order in which its interests are guaranteed
and its main rivals neutralised, then US policy in East Asia must be judged to have been successful.
Nowhere was this more apparent than in Japan.

9
 JAPAN, THE UNITED STATES AND THE NEW
ASIAN ORDER
As an emerging world power in the nineteenth century
it was almost inevitable that the United States would
quickly come to view the Pacific Ocean as an American
lake. Indeed, at a very early date in its history, the
United States was to pursue an expansionist westward
policy that brought it into conflict with Japan by
the middle of the nineteenth century and imperial
China by the end. Certain in the knowledge that
its own brand of muscular Christianity and robust
enterprise were superior to anything on offer in Asia,
Americans, like most ‘normal’ imperialists, viewed the
nations with whom they came into contact with a
mixture of contempt – the Chinese, according to one
American observer were ‘cold, snaky, slow, cowardly,
treacherous, suspicious, deceitful people’ – laced with
a large dose of nineteenth century racism. The peoples
of Asia offered little by way of inspiration, it seemed;
thus the best one could do was either convert them
to the Christian faith or teach them western ways and
hope that one day, after years of careful tutelage, they
would become as civilised as Americans themselves.
Ironically, the one country Americans seemed to admire
most before being drawn into war with it was Japan,
the only nation along the Pacific Rim that for a time,
at least, looked to some in Washington as almost
Anglo-Saxon in its desire to modernise its economy
and state by imitating western methods. Initially a
bulwark against imperial Russia (whose powerful navy
Japan had defeated in 1904), later a counter to the
USSR (after the revolution of 1917), and in possession
of an altogether more developed material civilisation
than that of decadent (and after 1911) disintegrating,
China, until the early 1930s Japan seemed to be a
natural partner for the United States in the Pacific.
All this was to change, though very slowly, as Japan
began its conquest of Asia, beginning with its
annexation of Korea in 1910 (about which the United
States hardly protested at all), continuing with its
invasion of Manchuria in 1931 (which again did not
provoke much by way of a US response), going on
with its attack on China six years later, and concluding
with its devastating conquest of much of the rest of
Asia in 1941, followed shortly thereafter by its attack
10
on the US Pacific fleet at anchor in Pearl Harbour.
This ‘day of infamy’, as President Roosevelt was to
call it, not only drew the United States into a Pacific
War it had hitherto sought to avoid, but over time
turned the United States into a permanent part of the
Asia-Pacific strategic landscape, and later a major actor
in Japan itself. Indeed, for at least seven years after
the Second World War, the United State effectively
governed Japan alone, and did so with a degree of
cultural sensitivity and political acumen (made all the
more necessary by the onset of the Cold War) that
left an indelible and generally positive impression on
the vast majority of Japanese.
Critical to the success of the new post-war relationship
was a recognition by Japan and its ruling elite – since
1945 organised into the dominant Liberal Democratic
Party – that Japan would accept its subordinate position
to the United States in exchange for an American
guarantee of its security. This in turn presupposed
another bargain: between a United States willing –
and indeed, enthusiastic – for Japan to concentrate
most of its efforts on rebuilding and developing its not
inconsiderable economic assets – critically dependent
on ready access to the US market – in exchange
for Japanese support for the United States in the
larger international arena. Finally, underpinning the
relationship was the understanding that while Japan
might pursue certain external policies of its own,
these would never be at the expense of regional
order or US leadership. Japan, in effect, would be a
semi-sovereign country.
No relationship remains entirely unchanged, and at
times this very special relationship was to come under
some strain, most notably in the 1980s, when high
Japanese exports to the US began to create genuine
economic disquiet in the United States. There were
also a few on the Japanese right who continued to
resent Japan’s semi-sovereign status, and during the
1990s argued that Japan should now begin to say
‘no’ to its powerful patron across the Pacific. However,
greater assertiveness towards the United States was
not something that generally tended to recommend
itself. In part, this had to do with domestic politics
and the fact that the Liberal Democratic coalition
that had run Japan since 1947 had no interest in
challenging an America. It also had a good deal to do
with economics: the relationship had brought Japan
nearly forty years of sustained growth (albeit with a
blip in the 1990s), and most Japanese had no desire
to upset something upon which their future prosperity
continued to depend. Finally, it had more than a little
to do with the region within which Japan happened
to find itself. Here there remained unresolved tensions
on the Korean peninsula. Post-communist Russia
continued to hold on to territory that Japan regarded
as its own. And as one century gave way to another,
Japan faced its first serious regional challenge in
the shape of China. Indeed, even with the decline
of the Liberal Democratic political stranglehold on
Japanese politics – and stirrings of anti-Americanism
in some quarters – the rise of China and the fears this
generated in Tokyo guaranteed a close relationship
with the United States.
CHINA COMES IN FROM THE COLD
If the foundational building block of America’s post-
war position in East Asia was its relationship with a
one-time enemy, its greatest challenge was a nation
with whom it had been closely allied until the late
1940s. However, having ‘lost’ China the United States
came to view Mao’s form of Marxism-Leninism as
being especially threatening. Even as late as 1969,
most Americans viewed China through a particularly
hostile Cold War lens, a perspective reinforced at the
time by the sheer turmoil through which China itself
was then passing – the so-called Cultural Revolution
– and by an increasingly desperate struggle America
was waging in Vietnam against a communist enemy
supported and armed by the Chinese (amongst others).
To make matters worse, American conservatives, in
particular, remained closely allied with the Republic of
China (better known as Taiwan), whose leaders had
every interest in continuing to foster distrust between
policymakers in Washington and political leaders in
mainland China.
The great strategic shift that initially broke the
diplomatic deadlock and subsequently saw the United
States opening up formal relations with Beijing has
been described in great detail by both historians and
students of international politics, including some of
those who were involved in this most remarkable
– almost revolutionary – of diplomatic reversals. It
has also given rise to a lively debate as to why it
happened. Thus, according to one school of thought,
the new arrangement was the product of Chinese
and American recognition that their greatest enemy
was less each other and more the USSR. Others have
stressed America’s effort to decamp as quickly as
possible from Vietnam using China’s diplomatic clout
as at least one instrument by which to limit the damage
to its own position in the region. Some have even
suggested a longer term American goal of opening
up China, and by so doing enticing it back into the
western fold. No doubt all these factors played a
role, though what now seems to have been a near
inevitable and irreversible process at the time looked
anything but. For instance, if Mao himself had not
died in 1976, if the Chinese economy had not been
so weakened by his earlier policies, or if the USSR had
not acted with such ineptitude in the late 1970s with
its invasion of Afghanistan, then it is just possible that
the rapprochement that followed may have taken
much longer or may not have happened at all. But in
the end it did, transforming the international system
and drawing China away from the deep diplomatic
freeze into it which it had been consigned since the
revolution of 1949.
The US rapprochement with China, followed in turn
by Beijing’s adoption of far-reaching economic reforms
and ready acceptance that its own modernisation
required an ever closer association with the global
economy, set China on a new course that over the
next twenty five years would have a major impact
on both China and the world. Most obviously, by
abandoning the path of revolution, China helped
reinforce America’s temporarily weakened international
position following its defeat in Vietnam in 1975. There
is also a good deal of evidence to suggest that by
working closely with the United States and placing
more pressure on the USSR, China may have played
a significant role, too, in bringing the Cold War to an
end. Finally, its new alliance with the United States
made possible the final defeat of Marxism as a serious
political challenge to capitalism in the Third World. As
the well-known American theorist Francis Fukuyama
noted in 1989, the death of Marxism in the 1980s
occurred for several important reasons, including its
11
 own failure to produce efficient economies that could
compete under world market conditions. However,
it was the effective (if not formal) abandonment of
Marxist-inspired planning in China that did as much
as Gorbachev’s policies in the former USSR to make
the case for liberal economics.
In spite of these critical changes, the relationship
between the United States and post-Maoist China
was never without its problems. Most obviously, the
Chinese leadership were determined to ensure that
economic change was not accompanied by political
reform or a loss of control by the communist party –
a development that in their view had had disastrous
consequences for a once formidable USSR. China
was clearly prepared to walk along the capitalist road
previously feared by Mao; but it was not prepared to
permit Chinese citizens the luxury of human rights
or the freedom to choose their own political leaders.
Secondly, there remained the outstanding issue of
Taiwan, once the United States’ key ally in the early
Cold War, and now a democracy whose very existence
posed a very real problem for a Chinese leadership
committed to a ‘one China’ policy. Finally, there was
the very real long-term problem of the impact of
China’s speedy rise on America’s position within the
wider international system. Optimists could claim, and
of course did, that a buoyant and dynamic Chinese
economy was good for the American consumer
(cheap imports), good for the American economy (as
China bought up the US debt) and good for regional
economic growth (critically important following
the Asian financial crisis of 1998). Yet there were
more than a few in the United States who remained
concerned about where this new dynamism might
one day lead. As one observer put it, the real issue
was not whether China was rising peacefully or not,
but rather what would happen after it had finally
achieved its ascent? As the first decade of the twenty
first century drew to an end, few Americans seemed
to have a clear answer.
12
THE UNITED STATES, KOREA AND THE LEGACY
OF THE COLD WAR
If the Chinese leadership revealed a shrewd appreciation
of how effectively a formally communist state could
take advantage of the global economy without
conceding any of its power at home, its neighbour
– and formal ally – North Korea demonstrated an
equally shrewd understanding of how to survive under
conditions where the tide of history was moving
against it following the collapse of communism in
Europe. Indeed, like South Korea, the North drew
some very important lessons from the collapse of one
very special communist state in particular: namely East
Germany. But whereas the leaders in the South drew
the not unreasonable conclusion that the regime in
the North was destined to change – and that the main
policy goal should be to ensure that its evolution did
not happen too rapidly – those in the North concluded
that everything short of war had to be done to ensure
that the communist state they had built at such cost
since 1945 did not change at all.
The method adopted by the North was a crude but
simple one: using nuclear brinkmanship as a way of
extracting concessions from its various opponents –
most obviously South Korea – while forcing the wider
international community (including the United States)
to come to terms with the North. Fearful that its own
survival was now in doubt, Pyongyang – whose nuclear
programme had been raising some very real concerns
in Washington since the late 1980s – began to push
hard, and in 1993 even threatened to withdraw
from the Nuclear Non-Proliferation Treaty (NPT). Not
surprisingly, this sounded a series of very loud alarm
bells ringing in Washington, forcing policymakers
to look at their very limited options – including the
appalling (and impossible) one of conventional war.
Out of this process finally emerged the decision to
cut what to many at the time looked like the only
deal possible: the so-called ‘Framework Agreement’
of 1994, a compromise solution that made a series of
concessions to the North Korean regime – including
delivery of large amounts of oil and aid – in exchange
for a promise that they would remain party to the NPT.
Few believed the agreement was perfect. But hardly anybody could see any serious alternative, including a
highly nervous South Korea, whose leaders by now were desperately keen to maintain some kind of relationship
with a regime whose rhetoric they seemed to fear a good deal less than its collapse.

The adoption of what many in the United States regarded as a flawed policy forced upon them by North
Korean intransigence on the one hand, and a South Korean desire to maintain some kind of relationship with
the North on the other, soon came under attack within Washington. The 1994 deal, critics on the right argued,
was little more than a modern day form of appeasement whose only consequence would be to preserve a
regime already doomed by history. It would also allow the communists in Pyongyang to play a game of divide
and diplomatic rule between the United States and its once steadfast South Korean ally. Equally serious, in
the opinion of critics, it did very little to slow the North’s nuclear programme down in any meaningful way.
Thus the Agreement was a failure in nearly every conceivable way. Naturally, no serious policymaker wanted
confrontation for its own sake, but there was a desire to find a more robust approach to the North Korean
problem, one that weakened this hideous regime rather than strengthening it, and punished it for its various
transgressions – only one of which was having a nuclear programme – rather than rewarding it.

The incoming George W. Bush administration did not at first seek a major review of US policy towards North
Korea. This though proved almost irresistible following the attack of 9/11 and President Bush’s announcement
of an altogether tougher policy towards all ‘rogue’ regimes. Indeed, by early 2002, he was already counting
North Korea as part of a wider ‘axis of evil’, and insisting that the policy of the United States towards it could
be nothing less than regime change. Inevitably this provoked a response from the North Koreans, who once
more threatened to withdraw from the Nuclear Non-Proliferation Treaty (which they did in 2003), while
pushing ahead again with its stalled nuclear programme. Thus began what looked to many observers like a
rather dangerous diplomatic game conducted between all the interested parties (not just the United States
and North Korea); one, however, which failed to prevent the North from acting in an increasingly aggressive
fashion – as exemplified in 2006, when it conducted its own missile tests and confirmed that it had, at last,
exploded a small nuclear device. This deliberately planned provocation nonetheless had the intended effect of
forcing its enemies back to the negotiating table, and in 2007 nuclear inspectors were once again admitted
into North Korea, while Pyongyang committed itself – yet again – to the NPT. Finally, in November 2007,
North and South Korea’s prime ministers met for the first time in fifteen years.

North Korea thus posed many significant challenges for US foreign policy in the years following the collapse
of communism in other parts of the world. If nothing else, it revealed that the end of the Cold War, whatever
its wider promise, threw up as many problems as it did opportunities. What North Korea also illustrated was
that critical issues such as nuclear weapons would not necessarily wither away once the Cold War came to
an end. If anything, the end of the Cold War era made these problems even more difficult to solve. Finally,
in attempting to deal with the policies of a failing regime on a divided Asian peninsula, the United States
discovered something that many Americans seemed to have ignored in the unipolar age: that however much
power one happened to possess, this alone did not solve some very real problems. Furthermore, since there
was no problem more difficult to solve than North Korea, it required the United States to ‘get serious’about
multilateralism and recognise that one had a much greater chance of solving these problems by acting with
others, rather than acting by oneself. 1

1 James Clay Moltz and C. Kenneth Quinones, ‘Getting Serious about a Multilateral Approach to North Korea’, The Nonproliferation Review, Spring 2004

13
 EAST ASIA: PRIMED FOR RIVALRY?

The continued division of Korea and the many challenges it posed for the United States pointed to something
more general about East Asia even after the end of the Cold War: that the region continued to contain within
it many serious fault lines that were not easily amenable to simple diplomatic solution. Here the contrast
with Europe could not have been more pronounced. Indeed, scholars of International Relations have been
much taken with the comparison, pointing out that, whereas Europe – both during and after the Cold War
– managed to create some form of a ‘liberal security community’, East Asia had not. Indeed, according to at
least one influential school of American thought, East Asia, far from being primed for peace after the Cold
War, was instead ‘ripe’ for new rivalries. In fact, according to Aaron Friedberg, writing in an influential and
much quoted article published in 1993, Europe’s very bloody past between 1914 and 1945 could easily turn
into Asia’s future.2 Uncertainty about the future of North Korea, unresolved tensions between China and
Taiwan, Japanese suspicion of China, China’s historical dislike of Japan, the persistence of authoritarianism,
and last but not least, the legacy of a very bloody history stretching back many centuries, when taken together
mean that the world in general – and the United States in particular – should remain deeply concerned about
East Asia’s highly uncertain future.

This pessimism (inspired as much by philosophical realism as by a deep knowledge of the region itself) has over
the past few years given way to an altogether less bleak assessment by American analysts and policymakers.
Few believe that East Asia will be without its fair share of difficulties going into the twenty first century. That
said, there is probably more to look forward to than dread.

First, the region has turned into one of the most economically dynamic in the world. Indeed, in global
terms, the region now accounts for nearly 30 percent of world economic production. Nor does there seem
much likelihood that it will slip backwards any time soon. On the contrary, the region overall appears to be
economically ‘blessed’, not so much in terms of raw materials but in other, more intangible, but important
assets including a culture of hard work – sometimes referred to as ‘Asian values’ – a plentiful supply of labour,
a huge reservoir of capital, and a set of political and economic structures that allows the state to play a critical
role in engineering successful economic outcomes. Nor in this lengthy list should one ignore the part played
by the United States itself. Indeed, by opening its market to East Asian goods while providing the region
with security on the cheap, the US has played what some would see as a very important part in generating
stable growth throughout the region.

Second, though many states in the region continue to have powerful and emotionally charged memories of
past conflicts, in and of themselves these are not enough to generate new conflicts in the present, especially
in circumstances where regional trade and investment are rising rapidly. East Asia certainly carries more than
its fair share of historical baggage (much of this deliberately exploited by political elites in search of legitimacy).
The fact remains that economic pressures and material self-interest are increasingly driving countries in the
region together, rather than apart. The process of East Asian economic integration may have been slow
to develop (ASEAN was only formed in 1967). Nor has integration been accompanied by the formation of
anything like the European Union. However, once regionalism began to take off during the 1990s, it has
showed no signs of slowing down.

2 Aaron L. Friedberg, ‘Ripe for rivalry: prospects for peace in a multipolar Asia’, International Security (1993).

14
A third reason for greater optimism is Japan itself,
which in spite of an apparent inability to unambiguously
apologise for past misdeeds, plays a most pacific role
in the region. Indeed, having adopted its famous
peace constitution while renouncing force as a means
of achieving its goals abroad (Japan also remains
one the strongest upholders of the original Non
Proliferation Treaty), it has demonstrated no interest
at all in upsetting its suspicious neighbours by acting
in anything other than a benign manner. Furthermore,
by spreading its not inconsiderable economic power
in the form of aid and large-scale investment, it has
gone a very long way in fostering better international
relations in the region. Even its old ideological rival –
China – has been a significant beneficiary, becoming
home by 2003 to over 5000 Japanese companies.
This leads us finally to the role of China itself. As we
have already indicated, there are still some unanswered
questions concerning China’s long term position in the
world. A great deal of American ink has already been
spilt worrying about ‘rising China’ and the threat this
is likely to pose to its neighbours and to the United
States. Yet here again there may be more cause for
optimism than pessimism, in part because China itself
has openly adopted a strategy (referred to as the
‘peaceful rise’) that has been specifically designed
to reassure other states that its economic ascent
will not necessarily lead to new political or strategic
problems. At the same time, China until very recently
appears to have been more interested in building
up its economic base at home rather than engaging
in adventures abroad.
Yet the great unanswered question remains: can China
continue to rise in its own region without causing fear
amongst its neighbours and concern across the Pacific
in Washington? Until the economic crisis of 2008 the
answer to this would have almost certainly been a
‘yes’. However, the last few years have seen the rise
of new tensions in the region – in the South China
Sea in particular – that have caused many states in
East Asia to rethink their relationship with Beijing; and,
in turn, look once more to strengthen their security
partnership with the United States.
THE UNITED STATES: STILL INDISPENSABLE?
Regional demands for a greater US presence point
to America’s still significant role in East Asia. Indeed,
even in an era when it has become fashionable to
talk of a diminished US role in the wider world, one
continues to be struck by how central the United
States remains in the thinking of all actors in the
region. Thus China, for all its bluster, still sees the US
as a vital partner. South Korea remains dependent on
the US for its protection. And a host of other states
in South East Asia – from Japan to Taiwan – maintain
important ties with Washington that they show little
inclination of wanting to give up. Nor do any other
states appear willing to play the wider role that the
United States plays.
At the end of the day, the position of the United States
in East Asia is likely to endure for the very simple
reason that many in the region have fewer doubts
about its intentions than they do about many of their
more immediate neighbours. East Asia may be in the
process of shedding part of its bloody history, but
the legacy of the past lives on to shape attitudes and
beliefs in the region. More concretely, there are still a
number of outstanding issues that remain unresolved
and thus require an American presence to ensure they
do not disturb the peace. So long as Taiwan worries
about China, China resents Japan, and South Korea
fears the North, there are few in the region willing
to contemplate a future without the United States.
If the US can be characterised as an Empire, then in
East Asia it is one that remains a welcome guest at
the high table of international politics. ■
15
 China and Southeast Asia1
Odd Arne Westad

T he most remarkable aspect of China’s international development over the past thirty years
has been its re-engagement with Southeast Asia. Until three decades ago China laboured
under a self-imposed exile from the continent of which it is a part. In the early 1980s China
had just fought a war with Vietnam, in which it lost at least 20,000 soldiers, and the other
Southeast Asian states understandably viewed China with suspicion. India, along China’s
south-western frontier, was politically close to the Soviet Union and had regarded China as
a diehard enemy since the 1962 war. It was an Asian world that seemed to have expurgated
China from its midst. The central kingdom was no longer central, but distinctly peripheral to
the rest of the continent.

Now look at the situation today. A most striking change in China’s foreign relations has taken place
to its south. In spite of their differences over the division lines in the South China Sea, the Southeast
Asian countries are today closer to China than they have been for at least a hundred years. Vietnam is
a case in point.

NORMALISING RELATIONS

China’s most recent border war was with Vietnam, a country Maoist China had supported in its struggles
for reunification against France and the United States. The 1979 war left deep scars in China. To most
Chinese, its course demonstrated Vietnamese ingratitude, Soviet perfidy, and Chinese military weakness
all in one. I visited the border areas not long after the war ended, and the shock was palpable. It was
no secret to local people that China had lost the war, or at least not won it.

Chinese diplomatic ineptitude had brought about the brief but disastrous Sino-Vietnamese war of 1979.
Throughout the late 1960s and 1970s, the Maoists had supported the radical Cambodian faction, the
Khmer Rouge, especially after it took power in 1975 and introduced a Maoist-type state. When the
Khmer Rouge leader Pol Pot repeatedly attacked Vietnamese territory, Beijing stuck by him because of
its concerns over Hanoi’s increasingly close relationship with the Soviets.

Throughout the 1980s China and Vietnam carried out a war by proxy in Cambodia, with Vietnamese
troops keeping a new government in place in Phnom Pen. China continued to support the Khmer Rouge,
despite the former regime ‘s claim to lasting infamy being that it carried the only known genocide against
its own population. Although China was not the only country that supported directly or indirectly the
Khmer Rouge remnants fighting from the jungles of western Cambodia after the Vietnamese forces
had thrown them out of the capital in 1979, it was the only one that kept a close political relationship
with Pol Pot’s group, supplying considerable amounts of weapons and funds to the Khmer Rouge both
before and after 1979. Kaing Khek Eav, or Duch, who went on trial in 2009 for torturing and murdering
14,000 people in Tuol Sleng prison during Khmer Rouge rule, spent a year in China in the mid-1980s.
Pol Pot himself spent two years there, ostensibly for medical treatment.

1 The text is amended from Odd Arne Westad, Restless Empire: China and the World since 1750, published by
Basic Books earlier this year.

16
Vietnam withdrew from Cambodia in 1989, as the
Cold War was coming to a close, but the terror of the
Khmer Rouge continued up to the movement’s self-
destruction in 1997, when Pol Pot killed his second-in-
command and then either died or was killed himself.
In the meantime, Cambodia could begin its slow
journey back from the nightmare it had experienced.
Nevertheless, the end of the Cold War had a deep
impact on the Sino-Vietnamese relationship. With
the Soviet collapse and with the war in Cambodia
won by the Vietnamese (although at a terrible
cost), both Hanoi and Beijing were eager to find a
modus vivendi. As China’s economy expanded, the
Vietnamese Communist leaders became convinced
that Vietnam had to reform its own economic sector.
By the early 2000s, much inspired by the Chinese
example, Hanoi had transformed its sluggish planned
economy in a market-led expansion that in relative
terms in Asia was second only to that of its northern
neighbour. But the worries the Vietnamese leaders
had over what they saw as Chinese attempts at
controlling their country did not abate, and they
were wary of Chinese investment, including that by
returning Sino-Vietnamese who had fled during the
war. Even so, China has become Vietnam’s largest
trading partner, and all forms of economic exchanges
are increasing rapidly.
Despite good economic links and decent overall
bilateral relations, some of the Sino-Vietnamese
tension that we have seen through history continues
today. Hanoi is particularly concerned over China’s
territorial claims in the South China Sea. This is a
conflict that is threatening to overshadow much of
China’s relations with its neighbours to the south.
But for Vietnam, having fought a recent war with
China, these claims have a direct security relevance
as well as economic implications. If Vietnam accepted
the Chinese position, even in part, then almost all
of its coast would be alongside waters controlled
by the Chinese navy. It would also, many in Hanoi
believe, be left out of the exploration of rich natural
resources under the seabed and rich fisheries in the
sea above. Having joined the Association of Southeast
Asian Nations in 1995 and dramatically improved
its relations with the United States, Australia, and
Japan, Vietnam is trying to multilateralise the issue,
in order to balance China’s growing power. China, on
its side, is worried that Vietnam is spurning its offers
of friendship and cooperation and that the country
might become a cornerstone in a US-led containment
policy toward China.
China has come a long way in normalising its relations
with what is probably, in the long term, its most
important neighbour in the region. But issues from
history stand in the way of a full partnership. Still
led by two communist parties, the two countries go
through frequent spats over historical issues. Both set
of leaders insist that the other should censor nationalist
sentiments on Internet sites or blogs. At the heart of
the matter is the view, never completely forgotten
in Beijing or Hanoi, that China is the central state
in the region, and therefore expects, or demands,
subservience by others. The Sino-Vietnamese
agreement on the exact land borders between the
two countries, signed in 1999, took ten years to
implement amid accusations that both sides were
moving century-old border markers in the dead of
the night to gain advantage. It will not be easy for
the two to achieve a balanced relationship.
FORGING LINKS
The foreign policy that China’s late leader Deng
Xiaoping formed focused on forging closer links
with Southeast Asia. The region is full of Chinese
migrants who have done well as well as companies
and individuals who could contribute to China’s
modernisation through trade and investment. Deng
thought their involvement in the PRC would be
less politically problematic than that of Americans,
Japanese, and Koreans. The problem Deng’s China
faced was that most Southeast Asian states had
leaders who saw China as a threat. They feared the
political influence of the Chinese minorities in their
own countries, and they resented the PRC because
for almost a generation it had sponsored communist
parties opposed to their governments. In countries like
Malaysia, Thailand, Burma, and the Philippines, China
had supplied communist-led guerrillas with money,
weapons, and training to carry on civil wars. It was
not an ideal starting point for opening up relations
with the existing regimes.
17
 In more ways than one, China got very lucky in its
attempts to reach out to old elites in Southeast Asia.
It could benefit from contacts with the Huaqiao, the
Southeast Asian Chinese. Some of these connections
had not even been broken during the Cultural
Revolution. China could also build on the general
assumption among the wealthy in the region that
China would be a gigantic market for Southeast Asian
goods if they could get in before other and more
powerful foreigners were able to establish themselves
there. From the early 1980s on, very much driven by
the Chinese diaspora, Southeast Asian companies
became a significant presence in China. Some of
them, such as Thailand’s Charoen Pokphand (Zheng
Dai in Chinese), are now among the largest foreign
investors there. The Vietnamese overthrow of the Pol
Pot regime in Cambodia in 1979 also helped China
in this regard. The PRC could stand as a de facto ally
of the conservative Southeast Asian regimes against
what they feared would be Vietnamese and Soviet
attempts at controlling the whole region. Singapore’s
anti-communist leader, Lee Kuan Yew, told Western
visitors that ‘if the Chinese had not punished Vietnam,
all of Southeast Asia would have been open to Soviet
influence. Now it has gained 10 to 15 years. The Thai
premier, for instance, is a new and relaxed man after
the Chinese punitive expedition.’ China’s attempts at
‘teaching Hanoi a lesson’ may have been a disaster
from a Chinese military perspective, but the stunned
praise it brought Beijing from countries further south
gave Deng time to quietly shelve his country’s support
for communist insurgencies outside its own borders.
As a Chinese-majority state and the most dynamic
economy in Southeast Asia, Singapore has played a
particularly important role for China. Deng Xiaoing
visited there in 1978, in his first foreign visit after
having retaken the reins of power in Beijing. Deng,
the proponent of ‘muscular growth’ as he called it,
was most impressed with what he saw. Deng had
last visited Singapore in 1920, when it was a colonial
backwater where the Chinese existed to do the work
for British authorities. By the late 1970s Singapore was
a powerhouse. It was in most respects everything Deng
wanted China to become. After returning to Beijing,
Deng stressed the need to learn from Singapore’s social
order and stability, from its economic versatility, and
from the role the government had in promoting and
18
steering growth. For three generations of Chinese
Communists, Singapore had been everything there
was reason to hate: capitalism, class oppression, and
closeness to the United States. In the 1980s and 1990s
it became an object of emulation, especially as social
and political unrest in 1989 threatened to derail Deng’s
plans. It also became an economic partner. Singapore
is now the fifth largest investor in China and a primary
conduit for the import of technology, including
forms of technology that China finds it difficult
to obtain elsewhere.
Lee Kuan Yew, the Singaporean leader, taught the
new Chinese leadership much about the region he
operated in. By the 1990s he stressed the importance
of the regional organisation, ASEAN. Originally set
up in 1967 as a framework for cooperation among
anti-communist governments, ASEAN soon took on
a much broader significance in terms of regional
integration. After the Cold War it began a set of
ambitious programs for deepening cooperation among
member states. And it added new members: Vietnam
in 1995, Burma and Laos in 1997, and Cambodia in
1999. Today’s ASEAN states, which together have
almost 600 million people in them, are aiming for an
economic community not unlike the European Union.
For China the emergence of ASEAN was both a threat
and an opportunity. Lee and other Southeast Asian
leaders were at first told that China preferred to deal
with individual states, not regional organisations. Then,
as it became clear that ASEAN would not accept a
divide-and-rule approach and that the organisation was
an increasingly integrated force for regional stability,
the Chinese government changed tack. Since the late
1990s, cooperation between China and ASEAN has
gone from strength to strength, with real practical
progress underlying the often fuzzy language about
Asian values and common heritage. On economic
issues, the big northern neighbour has come to be
seen more as a partner than a threat through a number
of new formal and informal mechanisms. China’s
support for regional currencies during the economic
crisis in 1997-1998 convinced even those who had
been critical of Chinese policies in the past that
Beijing now had no interest in economic dislocation to
its south. An ASEAN-China Free Trade Area came into
force in 2010, but there are still difficulties in the trade
relationship that need to be sorted out.
SECURITY PERCEPTIONS There is obviously much that still can go wrong in
the Sino-ASEAN relationship, in spite of a hopeful
As we have seen in the case of Vietnam, now a key
beginning. Within ASEAN, the biggest economy and
member of ASEAN, institutional cooperation does
the most powerful military are both Indonesian. With
not always translate into security perceptions. If one
a rapidly growing population of close to 250 million
speaks with leaders from the Southeast Asia region,
people, Indonesia has now become the key power
the overarching problem of living next to a giant
in the region, and its relationship with China has
is always present, in all its facets. In broad outline,
not always been easy. The CCP had supported the
the relationship is not unlike the one between the
Indonesian Communist Party, which was crushed in
United States and Latin America. But China’s southern
a military crackdown in 1965. In the massacres that
neighbours are, relatively speaking, far more powerful
followed the military takeover, Chinese-Indonesian
than those of the United States, not least because they
communities were targeted and thousands of
are better organised. Uncertainties over who will be
innocent people killed. The Indonesian constitution
in a position to develop the resources that border the
contained anti-Chinese restrictions all the way up to
Southeast Asian region create mutual suspicions and
the reintroduction of democracy in 1998. People of
potential conflict. ASEAN countries are for instance
Chinese ancestry are still underrepresented in politics
worried about Chinese links with Myanmar, a resource-
and military affairs but massively overrepresented in
rich member state that is, despite the recent opening-
business; it is often said that Chinese-Indonesians
up, still run by a particularly incompetent military
control up to two-thirds of the Indonesian private
dictatorship. The regional organisation has been
economy. There is much uncertainty in the relationship
pushing for reform in Myanmar, while China has
between Beijing and Jakarta, although the two are
seemed happy with status quo.
working together within an ASEAN framework.
But first and foremost the main ASEAN members
The contradictory form of the Sino-Indonesian
are concerned over Beijing’s claims to most of the
relationship came to the fore in 1998, a year many
small islands within the South China Sea. This vast
Indonesians celebrate as the beginning of their
maritime area holds immense riches – oil, gas, and
country’s democracy. As the strongly anti-communist
mineral ores – and both the ASEAN countries and
Suharto dictatorship ended, Indonesians of Chinese
China want to develop it. These waters also contain
descent were attacked in many parts of the country
the world’s busiest commercial sea lanes. China and
by mobs that accused them of amassing illicit wealth
Vietnam have already clashed over ownership of some
during the dictator’s rule. For older Chinese, who had
of the islets, with China occupying nine of the Spratly
had relatives killed thirty years before by the dictator’s
Islands, over which Vietnam also claims sovereignty.
forces on suspicion of being communists, the wanton
Now other ASEAN states are getting increasingly
murders and rapes in 1998 were signs that if you were
concerned about China’s motives and its actions.
of Chinese descent in Indonesia you were in constant
Chinese maps show Scarborough Shoal, about 120
danger whatever you did. One report described the
miles from Subic Bay in the Philippines, as Chinese
ordeal of a Sino-Indonesian family who ran a little
territory, and claim reefs as far south as thirty miles
corner store in a suburb of Jakarta: ‘Among the looters
off the coast of Borneo, all in the name of ‘historical
were people known to the family, including the local
rights’. From 2010 some ASEAN members have leaned
meatball seller, who made off with a television set.
heavily toward internationalising the issue, seeking
Others stole the photo-copier from the store and
support from the United States and other powers,
then later tried to sell it back to the family for a
such as India. All such attempts in the past have met
high price. A year after the attack the family were
with a stern reaction from Beijing, which has now
operating their store again, supplying basic goods
begun speaking of the South China Sea as a Chinese
to the neighbourhood.’ Unlike after 1965, the PRC
‘core interest’.
government’s reaction was measured. It stressed that
Sino-Indonesians were, above all, Indonesian citizens
who should be protected by their own government.
19
 Student protests in Beijing were quelled by the
authorities, who wanted a good relationship with
the post-Suharto regime in Indonesia.
China’s fear today is that Indonesia, and Southeast
Asian states more generally, will increase their
cooperation with the United States as a result of
Beijing’s economic rise and more powerful international
position. Military and diplomatic planners whom I have
spoken with see such a development as quite likely.
The United States had a close strategic relationship
with Indonesia during the Suharto dictatorship from
1965 to 1998, and most of the Indonesian leaders
are oriented toward the United States culturally and
educationally. They are also aware of the positive
impact in the country of President Barack Obama
having spent four years there as a child. Beijing is
trying to use its new economic muscle to be seen by
Jakarta as an equal of the United States. Right before
Obama’s first visit to Jakarta as president in 2010,
China offered investments of $6.6 billion in desperately
needed infrastructure improvements. But such forms
of economic cooperation are just turning the existing
situation around very slowly, especially as the United
States is rebalancing to focus on the region with the
ending of its wars in Iraq and Afghanistan.
Not surprising, then, that the Indonesian armed forces
in 2009 carried out a joint exercise with the United
States, code-named Garuda Shield. They, and other
ASEAN militaries, stress that they believe a US presence
in the region is needed in order to balance the growing
power of China. The Indonesians have also sought
closer relations with India, China’s rival further west.
China’s response has been halting. Most Chinese
leaders believe that a gradual and measured approach
to Southeast Asia, combined with China’s rising
economic power, will prevent great power rivalries
in the region. They tend to stress China’s historical
ties to the area, and their peaceful development over
a long period of time. But Beijing is in no mood to
barter away what it sees as Chinese rights in return
for a stable relationship. In 2010 China held its biggest
naval exercises ever in the South China Sea, with ships
from all three main Chinese fleets participating. For
the first time since the fifteenth century, China has a
predominant naval presence in the southern seas. ■

The South China Sea issue is less of an immediate

concern to Indonesia than to some of the other
ASEAN members, but Jakarta has made a point of
full ASEAN solidarity on the matter. Unfortunately for
both countries, especially in the longer run, China’s
ocean claims overlap with Indonesia’s economic zone
in one area, which happens to be part of the world’s
largest gas field off the Natuna Islands. The Indonesian
government has reacted very negatively to what it sees
at Chinese attempts at intimidating its neighbours.
When some ASEAN states tried to raise Law of the
Sea concerns at the ASEAN regional forum meeting
in 2010, the Chinese foreign minister reminded his
counterparts very sharply about the difference in size
between China and its southern neighbours. The
Indonesians will not have it; a former top foreign
policy maker told me afterwards that ‘Indonesia is a
serious country that will not be bullied’.

20
Southeast Asia Between China
and the United States
Munir Majid

T he new geopolitics of Southeast Asia is dominated by the emerging regional rivalry between
China and the United States. The contest has been highlighted by incidents in the South
China Sea where the US has made clear its interest in ensuring freedom of navigation and in
the peaceful settlement of China’s disputes with smaller regional states. Some in the Pentagon
project an ‘AirSea Battle’ in the region similar to the ‘AirLand Battle’ planned during the Cold
War – a scenario given credence by US Secretary of Defence Leon Panetta’s announcement at
the Shangri-La Dialogue in June 2012 of an American naval force ‘rebalancing’ in the Pacific
from the current 50 percent to 60 percent by 2020. More widely, historian Arne Westad describes
Southeast Asia as ‘The decisive territory, on the future of which hangs the outcome of a great
contest for influence in Asia.’1 Indeed, the rivalry extends well beyond maritime issues, and
Southeast Asian states have been drawn into this contest, whether or not they have disputes
with China in the South China Sea. What led to this strategic turn, how the maritime disputes
might develop, and the diplomacy required to negotiate the tensions and determine the future
of regional institutions, are matters of some complexity. Close proximity to events and issues
can lead to premature conclusions. There has, therefore, to be a certain level of circumspection
in any commentary on the new geopolitics of the region. Nevertheless, any analysis of this
situation must project future trends and outcomes, even as contemporary events are weighed
against their long-term strategic significance.

STRATEGIC CONTEST

Not all is new in the ‘new’ geopolitics of Southeast Asia. What is new is the priority the United States
has declared it is now giving to the region. This follows a period of relative neglect since the end of
the Vietnam War, and the more recent American focus on Afghanistan and Iraq, even if there was an
engagement with Southeast Asia in the aftermath of 9/11. Since the United States’ departure from
Indochina, and especially in the last two decades, China’s economic rise has seen the depth and breadth
of its influence in Southeast Asia, and indeed the world, increase. At the same time, American security
and military preoccupations in the Middle East and Central Asia, as well as the financial and economic
crisis since 2008, have caused its regional role to diminish. A new strategic reality has therefore been
evolving in SoutheastAsia, driven by China’s economic rise against a background of the US’ foreign policy
adventurism and its relative economic decline.

1 Foreword in Munir Majid, 9/11 and the Attack on Muslims, Kuala Lumpur, MPH Publishing, 2012. For a useful American perspective on the rivalry
see Aaron L Friedberg, A Contest for Supremacy, New York, W.W. Norton, 2011. Arne Westad has recently published a magisterial work on the modern
foundations of China’s view of the outside world: see Arne Westad, Restless Empire, China and the World since 1750, New York, Basic Books, 2012.

21
 The Obama administration has decided to attempt to arrest this regional strategic drift with a strategic ‘pivot’
towards the Asia-Pacific. The US protests it has always been an Asia-Pacific power, but it had been a while since
it acted like it, at least insofar as Southeast Asia was concerned.2 Now it has done so through clear strategic
policy pronouncement and diplomatic manoeuvring. There is a new contest for influence in Southeast Asia.

The pivot is taking place in the context of deepening Chinese regional relationships. China’s economic rise
and success not only won the admiration of Southeast Asian countries, but also helped Beijing establish
strong trade and financial ties with them. China is now the second largest economy in the world (figure 1),
with economic growth of about 9-10 percent per annum since the late 1970s, even as the American share
of global GDP declined since 1999. The size of the Chinese economy is expected to surpass that of the US
by 2030. As of 2005, China had lifted over 600 million people out of a dollar-a-day poverty. It is the world’s
largest exporter and will probably be the biggest importer as well in the not too distant future. It is the world’s
largest holder of foreign exchange reserves. It has become the world’s biggest creditor, lending more to the
developing world than the World Bank. China’s economic and financial might has particularly been felt in
Southeast Asia as that of the United States receded, especially since the Asian financial crisis of 1997-98, when
with the United States conspicuous by its inaction, China’s refusal to devalue the renminbi (RMB) was of great
help to struggling Southeast Asian economies. Beijing’s economic diplomacy since then has been deft and
effective. The China-ASEAN dialogue process had started with the Senior Officials Consultation meeting in

Figure 1: GDP Current Prices (in billions of US dollars) 2011

UK ITALY RUSSIA
BRAZIL 2,480,978 2,245,706 1,884,903
2,517,927
EU 17,960,206
FRANCE
2,808,265
GERMANY
3,628,623

JAPAN
5,855,383

CHINA US 15,064,816
6,988,470

GDP Current Prices (2011) GDP based on PPP per capita GDP
(billion dollars) (units current international dollars)
48,147.23
15,064.82
20,000 50,000

698.47 40,000
15,000
30,000
2,112.40 8,394.07
10,000 5,522.00
20,000
5,000 10,000
0 0

US China ASEAN US China ASEAN

Source: World Economic Outlook Database, IMF

2 US Secretary of State Hillary Clinton remarked during a visit to Malaysia in November 2010: ‘Since day one of the administration, Obama and I have made
it a priority to re-engage with Asia-Pacific as we know that much of the history of the 21st century will be written in this region because it is the centre of so many
of the world’s biggest opportunities and challenges.’ Secretary Clinton fully developed the point, America’s Pacific Century in Foreign Policy, November 2011.

22
1995, and in the wake of Asian financial crisis, China,
along with Japan and South Korea, accepted ASEAN’s
invitation to attend an informal summit in Kuala
Lumpur in 1997, which evolved into ASEAN+3 (APT).
By October 2003, China had acceded to ASEAN’s
Treaty of Amity and Cooperation (TAC). The China-
ASEAN Free Trade Area (CAFTA) came into effect in
January 2010.
even if the final products are still destined for the
huge consumer markets of the US and Europe.
Since 1993 China has been a net importer in regional
trade. About 50 percent of China’s component imports
are from Japan, Taiwan and South Korea. In terms of
FDI, Japan has over 30,000 companies investing over
$60 billion in China; South Korea also over 30,000
investing more than $35 billion; Singapore is involved

Regional economic integration in East Asia as a whole
has proceeded apace. Intra-regional exports have
been growing in the past decade from 34 percent
in 2002 to over 50 percent in the ASEAN+3 region
(figure 2). The rest of the region is riding on China,
in over 16,000 projects with investments of over $31
billion. Even Taiwan, with whom China has a non-
negotiable ‘core interest’ problem, has over $110
billion invested on the mainland, and just in August
this year signed an investor-protection agreement

Figure 2:
China and US Direct investment in ASEAN (US million dollars) 2007-2010

Source: ASEAN Statistics Database

Direction of ASEAN Imports and Exports (China vs US)

Source: ASEAN Statistics Yearbook, China Daily, Office of the United States Trade Representative
23
 with Beijing (Taiwanese firms are responsible for 60 percent of China’s hardware exports). Furthermore,
multinational companies account for 60 percent of China’s total trade, and 80 percent of the value of their
exports is imported. Indeed, about 60 percent of all imports into the US emanate from US subsidiaries or sub-
contracted firms operating in China. What these figures show is that it is not simply ‘Chinese’ exports that
determine the geoeconomic terrain of the region. Instead, China is at the centre of regional and international
division of labour.

Moreover, all the surpluses are recycled. Paul Krugman calls China a ‘T-bills republic’, such is its integration
in the global and regional economy. During the Western financial and economic crisis of 2008, China
pulled its weight with a RMB4 trillion ($586 billion) stimulus package. East and Southeast Asian countries
were better able to contend with the 2008 crisis not only because of the improvements they had made in
corporate governance, foreign exchange reserves, bank capitalisation and regulation since the Asian crisis of
1997-98, but also because of China’s emergence as a key driver of economic growth.3 Following the Asian
crisis, China had been instrumental in the setting up of the Chiang Mai Initiative Multilateralisation (CMIM)
to support economies in the ASEAN+3 region facing short-term liquidity problems with a pool of foreign
exchange reserves presently standing at $240 billion. A regional office based in Singapore has been set up
to conduct the kind of macro-economic surveillance the IMF does, with the CMIM standing ready to give
financial support of up to two years based on agreed covenants. China’s economic rise, while enabled by the
US-led open global financial and economic system, has also been achieved by doing the right economic and
financial things together with regional states. As a result, seven Asian economies have been identified as the
future engines of global growth, with the growth in the emerging middle class being a key driver (figure 3).

Figure 3: Engines and Drivers of Growth

Engines of Growth (Asia-7 Economies)
Between 2010 and 2050, they will account
for 87 percent of total GDP growth in Asia
and almost 55 percent of global GDP growth.
They will thus be the engines of not only
Asia’s economy but also the global economy.
The Emerging Middle Class is a Key Driver
The middle class is the source of savings and entrepreneurship
that drives new products and processes. Growth comes mainly
from new products and most growth happens when new products
are targeted at the middle class. Consumption by the global
middle class accounts for one-third of total global demand.

2010 2050 2030 2050

GDP GDP
Country Country Middle Upper GDP Middle Upper GDP per
(MER (MER
class class per class class capita
trillion) trillion)
capita (PPP)
PRC 5.7 62.9
(PPP)
India 1.4 40.4
PRC 1,120 40 21,100 1240 190 47,800
Indonesia 0.7 11.4
India 1,190 15 13,200 1400 210 41,700
Japan 5.4 8.2
Indonesia 220 5 13,500 250 40 37,400
Republic 1.0 3.7
of Korea Japan 100 20 48,900 60 40 66,700

Thailand 0.3 3.2 Republic 30 20 60,200 10 35 107,600

of Korea
Malaysia 0.2 2.6
Vietnam 80 2 11,900 100 15 33,800
Total 14.8 132.4
Asia -7 World 4,990 580 19,400 5,900 1,500 36,600

Source: IMF World Economic Outlook, US 185 190 65,500 120 290 98,600
Oct 2010; Centennial Group
Projections 2011 Germany 50 30 51,300 2 60 77,800

Source: Centennial Group Projections 2011

3 Morgan Stanley report, 6 November 2008.

24
Figure 4: Southeast Asia’s Relative Position in US Investments

US Direct Investment
Position Abroad on a CANADA
ASIA and PACIFIC
Historical-Cost Basis 605,202 318,964
(in US millions of MIDDLE EAST
35,905
dollars), 2011
AFRICA
56,632

LATIN AMERICA
and other WESTERN
HEMISPHERE
831,151

EUROPE
2,307,697
THAILAND OTHER
11.308 7,946
US Direct Investment SINGAPORE
AUSTRALIA
Position Abroad in Asia 116,616 TAIWAN
15,803 136,249
and Pacific on a Historical-
PHILIPPINES
Cost Basis (in US millions 5,321
of dollars), 2011
NEW ZEALAND 6,741
CHINA
MALAYSIA 54,234
13,903

HONG KONG
Source: ASEAN Statistics REPUBLIC OF 52,542
KOREA
Yearbook, China Daily,
31,751 INDIA
Office of the United States JAPAN INDONESIA
11,591 24,663
Trade Representative 116,533

Figure 5: China vs US Foreign Direct Investment in ASEAN

9,000.0

8,000.0

7,000.0

6,000.0

5,000.0
US-ASEAN FDI
4,000.0

3,000.0

China-ASEAN FDI
2,000.0

1,000.0

0.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

-1,000.0

Source: ASEAN Statistics Yearbook, China Daily, Office of the Unites States Trade Representative
25
 Impressive though such numbers and trends are, they only represent the foundation of a future prospect, a
work-in-progress. While the story of China’s and Asia’s economic rise is absorbing, coming as it does at a time
of relative American economic decline, it is important to avoid the temptation to treat future projections as
current reality. The United States’ economy is still by far the largest and most sophisticated single economy in
the world. It is a substantial market for ASEAN, and US investment in the region is still substantially greater than
China’s (see figure 4). The United States also retains significant technological superiority, as well as structural
advantages including the reserve currency role of the US dollar, that together mean that the US has greater
capacity to extract itself from its economic problems than any other nation in the world.4 Moreover, China’s
massive holdings of dollar-denominated assets are a double-edged sword, described by some as ‘symmetrical’
interdependence.5 Finally, of course, the US has a military force without equal, ensuring American command
of the global commons. In 2011 the US spent over eight times more on defence than China, its nearest
competitor (see figure 5). The $739.3 billion Pentagon budget comfortably exceeded the $486.4 billion of
the next nine powers, of whom only two could be remotely conceived as ‘hostile’ – China and Russia.

In the past couple of years or so, the US government has been less reticent about being seen to be promoting
US trade, investment and technology in Southeast Asia. At the end of 2010 Hillary Clinton, while on an official
visit to Malaysia, found time to showcase the cutting-edge technology of GE and Boeing. The US-ASEAN
Business Council, which shadowed her visit, was represented at a much higher level than has usually been
the case. In July 2012, the US Secretary of State spoke in Siem Reap at the end of a business promotion
seminar jointly organised by the Council, the US Treasury and the Department of State. This concentrated
US effort, not often seen in Southeast Asia, let alone in Cambodia, Beijing’s close ally, came just after the
Phnom Penh ASEAN Foreign Ministers meeting that failed to agree to a joint communique for the first time
in its history because of differences over how to mention incidents in the South China Sea disputes. Apart
from strong US government involvement, what stood out was a willingness to be politically agnostic in
the furtherance of strategic economic interest. The next morning the US business delegation continued to
Myanmar, accompanied by senior officials from the US Treasury. In these and other diplomatic endeavours,
there is a desire to signal a strong economic dimension to the pivot distinct from the security and military
concerns that have dominated the headlines.

However, there are shortcomings in what the US is offering. Leaving aside the administration’s domestic
economic and political difficulties, its proposed economic arrangements in East and Southeast Asia, in contrast
to China’s, are distinguished by their failure to be inclusive. The Trans-Pacific Partnership (TPP) initiative, apart
from excluding China, also leaves out Cambodia, Laos and Myanmar, whilst including Vietnam and welcoming
all other Southeast Asian states. Whatever the curious criteria for membership that is being applied here, it
encourages regional division. The American insistence on rules-based economic integration or engagement
has also slowed progress in forging free trade agreements (FTAs), for example one with Malaysia which has
been stalled for some time over issues like procurement rules and freedom of investment. Although the Obama
administration now appears to want to concentrate on the TPP rather than individual FTAs, the coupling of
political and human rights issues with US trade and investment causes resentment and uncertainty among
many regional states.

4 See Carla Norrlof, America’s global advantage : US hegemony and international cooperation, Cambridge University Press (2010).
5 See, for instance, Joseph S. Nye, Jr, ‘China’s Bad Bet Against America,’ PacNet Newsletter, March 25, 2010

26
All this is in sharp contrast with the way in which China conducts its relations with the region without apparent
precondition.6 Whatever the US’s domestic legal and policy predisposition, it will have to bring to the table a
package of economic benefits that is not compromised by high political costs. Of course there are American
technologies and corporations without equal in the world which could tip the balance, but there are also
proximate companies emerging from China such as Huawei and Lenovo; just as Sony, Toyota and Samsung
emerged in the past. The region has moved on from the time when American technologies and corporations
were singularly dominant.

As with its economy, companies and technologies, the United States as a global political power no longer
exercises sole dominion in Southeast Asia. China’s economic counterweight has shifted the scales. However,
the US is not waiting to be reduced to sub-primacy in the region as a result of what some have dubbed
Chinese ‘domination by stealth’. While singular but hugely significant events such as China’s increasingly
assertive approach in the South China Sea disputes may appear to have reignited US involvement in the
region, there is a broader ‘rebalancing’ strategy to register American power and influence, and to thwart a
de facto Chinese Monroe Doctrine over Southeast Asia.

However, the diplomacy of rebalancing faces a number of challenges. The US is not ‘returning’ to ‘virgin’
Southeast Asian territory. In recent decades the region has been transformed by a focus on economic
development, and if the US wants to engage the region it has to recognise this, and rather than seek to dislodge
any party instead strive to enjoy combined prosperity. Of course the region, including China, developed on
the back of American markets, but this is global interdependence, from which American corporations and
consumers also benefited. It is not a debt owed by anyone. The Americans understandably wish to benefit from
the projected Asia-Pacific growth in the future, but participation has to be on an inclusive basis if autarchic
arrangements or trade wars are not to develop which will stunt that prosperity. For a start, an inclusive
TPP which includes China would show economic good faith. This would have far-reaching geoeconomic
ramifications and will undercut exclusively East Asian arrangements favoured by China. Beneath the super-
structure of evident strategic contest there is a deep unresolved conflict of ideas over economic and political
order. When Francis Fukuyama wrote about the end of history he did not ask the East Asians.7 There is a
nascent East Asian, largely state-based, model of development that offers an alternative to the American
neoliberal model Fukuyama prematurely proclaimed triumphant with the demise of the Soviet Union. The
weaknesses of the Western model highlighted in the financial crisis of 2008 and the subsequent recession –
financial market excesses, over-consumption, under-saving and massive private and public deficits – are part
of the contemporary economic landscape, and for it to retain its appeal demonstrable repair to correct the
damage done is needed. While the ‘Chinese’ model is by no means fully formed and, indeed, has serious
weaknesses, the United States should not expect to just gloss over the evident shortcomings of the Washington
Consensus and the economies based on it.

On the political side, while the pivot is essentially diplomatic in nature, its execution cannot be comprised purely
of diplomacy. The catalyst for the pivot was a situation not only of reduced American regional influence but
also of more assertive Chinese actions, especially in the South China Sea. When Hillary Clinton proclaimed at
the ASEAN Regional Forum (ARF) in Hanoi in July 2010 that the US had an interest in freedom of navigation
and the peaceful settlement of disputes in the South China Sea, she did so with the encouragement of
regional states at the meeting, and not in a benign context. This is often noted as the first real instance of
American re-engagement in the region. China was put on notice and indeed, at that meeting, indicated it did

6 Interestingly, a trilateral FTA, as well as an investment promotion agreement, will be negotiated later this year among China, Japan and South Korea
(constituting altogether around 20 percent of global GDP) despite tensions with one another. Such pragmatism will make possible the third largest FTA in the
world after NAFTA and the EU. With the three countries also having FTAs with ASEAN, this could reinforce an ASEAN-led East Asian multilateral structure – while,
of course, the Americans would want an Asia-Pacific dimension so as not to be excluded. The three countries (including Taiwan, Hong Kong and Macao) account
for 90 percent of East Asia’s total GDP and over 90 percent of its foreign reserves.
7 Francis Fukuyama, The End of History and the Last Man, London, Hamish Hamilton, 1992.

27
 not appreciate being cornered. Whilst by the time of the East Asia Summit (EAS) meeting in Bali in November
2011, at which the US (and Russia) became members, the temperature had cooled down, there continued
to be pressure on China about its actions and intentions in the South China Sea. Prime Minister Wen Jiabao
handled the situation better than Foreign Minister Yang Jiechi did in Hanoi, soothingly noting comments on
the disputes but repeating the Chinese mantra that they are best resolved bilaterally even if there might be
regional concern, and swiftly proceeded to underline, in some detail, that the greatest challenge facing the
region was economic. He referred consistently to ‘East Asia’ (as opposed to the Asia-Pacific), and emphasised
how the region should be thinking about addressing the global economic problems facing it.

The United States, on the other hand, was more focused on political, security and military issues, and did
not offer any guidance to the region on how the global economic problems could be addressed. Wen
Jiabao’s sub-text might well have been: the United States is the primary villain for the world’s financial and
economic problems, and is too busy grappling with its own to offer any leads to the region to which it has
now come back. Of course, this reopens the whole argument over who is responsible for the global financial
and economic crisis, a debate in which China and the region speak with one voice, emphasising the United
States’ mismanagement of the financial system and the unsustainable imbalances of Western economies that
through public and private leverage have consumed more than they have produced for too long. Southeast
Asia’s conviction that economic discipline needs to be restored in the West, and in particular, that the United
States’ indebtedness needs to be reined in, highlights the intermingling of the economic with the political
and security arguments, a feature of the regional strategic contest which the US cannot avoid and that China
will always stress. Still, even from the purely political and security perspective, there will be questions asked
about America’s new commitment to the region, some founded, again, on economic sustainability. Many
realists point to the risk of strategic over-stretch.8 Even as the US’s commitments in Iraq and Afghanistan end,
it does not mean the pivot in the Asia-Pacific is intended to take up the slack – there is no slack at this time
of austerity. And what exactly does the pivot mean in wider security terms and in respect of its application in
particular situations? While the US can ‘rebalance’ its naval forces, for what exactly is that formidable military
power intended, either as a deterrent or in conflict? From Hillary Clinton’s forceful statement at the ARF in
Hanoi, it would appear that the US will use naval force to ensure there is no interference with shipping and
navigation on the high seas. However, despite the many incidents in the South China Sea, it has not been
deemed that there has been interference requiring such intervention. In the episodes this year involving China
against Vietnam and the Philippines, Manila in particular had hoped to draw in the US in the Scarborough
Shoal standoff, but found that from an American perspective the incident did not amount to interference
with navigation, and that the US did not regard localised incidents as attempts at settlement by forceful
means. The state of flux in the South China Sea thus reflects the ambiguous finer details of the pivot, and
raises the question of how seriously regional states should take the United States’ commitment to project
military power in support of its declared principles.

This in turn raises a deeper question of credibility and constancy of policy. While it is clear that the US intends
to be actively involved in Southeast Asia once again, confirmed by its membership of the EAS in November
last year, it remains to be seen how deeply and enduring that involvement will be. Naval arrangements are
being introduced, revived or improved, including with the Philippines, Singapore, Thailand and Vietnam, which
reflect the credibility of American presence. However, in the wake of Iraq and Afghanistan, the US’s concerned
but cautious approach to the Arab uprisings and its delicate handling of the Iranian nuclear issue mean that
China will be watching to assess America’s approach to its use of military power – as will the rest of Southeast
Asia. For those regional states, the handling of the South China Sea is likely to be the critical measure. The
concern is China might miscalculate if there are not clear lines of mutual understanding with the US beyond

8 For a recent illuminating discussion on the limits of contemporary American power see Dana Allin and Erik Jones, Weary Policeman, American Power in an
Age of Austerity, Routledge for International Institute for Strategic Studies, London, 2012.

28
the last incident. On the other hand, while it can be expected the US will decide for itself the balance of risk
and benefit from the use of military power, it must do so in a way that avoids either wishful thinking about
the nature of an adversary or a self-fulfilling panic about that adversary’s intentions and capabilities.9

Such detached analysis is not currently evident in the US, which exhibits a disturbing sense of suspicion and
fear of China across all fronts. During a visit to Washington in May this year, I found influential Senators and
think-tanks uniform in their view China could not be trusted and was getting out of hand. This constituency
feels vindicated in that assessment by Beijing’s claims and recent actions in the South China Sea. High
officials in the State department were more circumspect, and wanted to know how the US could work
better with states in the region, including in addressing the South China Sea problems. The US could make
a real contribution by taking the approach that the deep seabed was the common heritage of mankind and
fashioning American involvement in these issues on this basis, rather than simply repeating the mantra of
freedom of the seas and peaceful settlement of disputes.10 Without under-estimating its complexity or the
political barriers involved, any engagement of the US along these lines could be a crucial step in winning
over Southeast Asian States and, indeed, enlisting Beijing in a positive-sum game. However, the way relations
between China and US are developing does not give much hope that creative engagement, especially in the
strategic contest in Southeast Asia, will achieve much. Yet the animosity between American and Chinese
elites will have to be addressed once the next Obama administration is in place and China’s new leaders to
be confirmed on 8 November find their feet.

Even then, domestic politics in both countries are not likely to allow easy accommodation. There is extreme
polarisation in the US, which may also have foreign policy expression. President Obama’s re-election still
leaves unresolved the political paralysis in government between Congress and the White House . Whilst the
President has wide-ranging perogatives in foreign policy, the China question has deep domestic implications.
A tough stance against Beijing could become an attractive trade-off for Congressional budgetary concessions,
particularly if there is short-term economic benefit to be gained from that stance as well. A second term
President Obama may surprise, but there will be domestic policy dues to pay, which may in the end bring
out the pragmatist in him. There could be a ‘tough’ stance against China. In that eventuality, the pivot could
become a hardball engagement in Southeast Asia, concentrated on the seas of North East and Southeast Asia.
Regional states may be driven into making a choice between the US and China, something which they hope
and imagine they can avoid. The impact of internal politics on China’s foreign policy is also not to be under-
estimated. This is not only because of the purge of Bo Xilai or the coming change in the senior leadership of
the Party. There is increasingly greater expression of popular views which can be channelled towards issues
of foreign policy, especially where historical grievance animates nationalism, such as in the current relations
with Japan. In addition, Chinese perceptions of their rise – as the second largest economy in the world on
which the US depends for credit – can give rise to hubris. Internal politics, if it isn’t already doing so, may
therefore exert pressures on the Chinese leadership to prematurely show strength in international relations.

It is often said China prefers the clarity of Republican foreign policy to the nuance of the Democrats. This is
of course an over-simplification. Henry Kissinger records Deng Xiaoping complaining of how he and President
Nixon were not hindered by the savage Cultural Revolution from forging relations with China in the early
1970s, yet under George Bush snr the Tiananmen massacre became such an American bone of contention
with China.11 What made the difference was the impetus to seize the strategic moment – in Nixon’s case
the opportunity for strategic alignment with Beijing following the Sino-Soviet split. A tough stance against
China could bring clarity to the hard strategic contest in Southeast Asia, and in doing so cause China’s
9 This is the ‘duality’ of George Kennan’s wisdom, in a different context of course, quoted in Allin and Jones, op. cit., pp.104-5.
10 The common heritage of mankind idea was one of the main issues that prolonged negotiations before the conclusion of the UN Convention on the Law
of the Sea (UNCLOS) in 1982. It is this notion, expressed in the establishment of the International Deep Seabed Authority, which prevents the US Congress from
ratifying the convention. For a passionate espousal of this idea see C.W. Jenks, Law, Freedom and Welfare, London, Stevens and Sons, 1963.
11 Henry Kissinger, On China, London, Penguin Books, 2012, p.425

29
 peaceful rise to come off the rails. This would be bad news not just for China, but for Southeast Asia as a
whole, with the region’s hitherto economy-first-security-afterwards approach to international politics being
sharply reversed. China’s new leaders may struggle to deal with severe international and internal challenges
being cast at the same time. The racy aspects of the Bo Xilai affair have been widely commented on, but the
underlying and incremental loss of trust in how the country is being governed which it highlights has yet to
be fully appreciated.12 Combined with a slowing economy, rising unemployment and distributional issues,
China’s new leaders will be facing foreign policy challenges at a time of domestic distress, which does not
make for stable external relations. Already, China has made some impulsive moves in the disputes in the
South China Sea, and in its island disputes in northeast Asia. It has not quite thrown down the gauntlet, but
conflict in the South China Sea has become the first serious test in the strategic contest between China and
the US in Southeast Asia.

STORMY SOUTH CHINA SEA

For much of this year hardly a day has passed without a report or commentary on issues and incidents in the
South China Sea. Not since the Vietnam War has there been this level of foreign interest in Southeast Asia.
Yet for regional states the disputes in the South China Sea have existed for many years, always with the
hope that the disputes will not escalate into conflict, as countries in the region concentrated on economic
development and cooperation, including with China, with whom four of them have maritime disputes (see
figure 6). Even when there had been serious outbreaks of conflict, as in a naval battle in the Paracels between
China and the then South Vietnam in 1974, or in 1988, when over 70 Vietnamese were killed in a naval battle
with the Chinese in the Spratlys, there followed an attempt to carry on with peaceful regional life even as
those disputes were not resolved and memories of conflict not erased. ASEAN countries and China signed
the Declaration on the Conduct of Parties in the South China Sea in 2002, and the regional organisation
has been working for over ten years without success on a more specific code of conduct to govern maritime
activity in the disputed waters. As ASEAN worked in good faith to produce those governing documents it
was hoped that the states involved would avoid misconduct; what is sometimes seen as muddling through
is rather the way ASEAN has tended to work so as not to ruffle too many feathers. This ASEAN way – the
slow motion effectuation of functional integration – has worked in promoting economic cooperation, even
if not at the pace many would have liked, and in limiting conflict in the region in the last couple of decades
or so. 13 But, almost suddenly, everything changed with the series of incidents in the South China Sea and
premature proclamations of sovereignty, precisely the kinds of crises the muddling-through-to-functional-
integration approach sought to avoid. The ASEAN approach of papering over cracks was a casualty when
its Foreign Ministers met in Phnom Penh in July this year, but were unable to issue a joint communique for
the first time in the organisation’s 45-year history because of differences over how to word references to the
South China Sea disputes and recent incidents.

What brought about this more impulsive and intransigent behaviour, both on the high seas and at the
ASEAN council tables? China claims the American pivot and interference in the regional maritime disputes
have encouraged claimant states to be more assertive. The two states cited – the Philippines and Vietnam
– counterclaim that the Chinese vessels, both civilian and military, have become increasingly bullying at sea.
The US continues to assert that it will not tolerate any interference with freedom of navigation and, whilst
refusing to take sides in the disputes over rights and sovereignty of the islands, rocks and waters, to urge a
peaceful settlement. Domestic constituencies, America’s included, are becoming ever more agitated, as after

12 See, for instance, Lanxin Xiang, ‘The Bo Xilai Affair and China’s Future’, Survival, June-July 2012, pp. 59-68.
13 See generally the Special collection of papers on ASEAN in the Cambridge Review of International Affairs, Volume 22, Number 3, September 2009 where,
among other points, it is asked if the ‘ASEAN way’ is receding and whether ASEAN is just the vehicle for conflict avoidance rather than resolution.

30
each incident reports highlight the untold hydrocarbon
wealth in the seabed (for example, 213 billion barrels
of unproven oil reserves, against the 265 billion barrels
of proven reserves held by Saudi Arabia in 2011,
according to BP’s Statistical Review of World Energy),
as well as rich but fast depleting fisheries resources
in their waters.
Internationally, China is often identified as the villain of
the piece. This of course riles the Chinese when they
believe they have absolute right on their side. China
argues its claim to sovereignty, exclusive economic
zone (EEZ) and continental shelf rights in most of
the South China Sea can be traced back 2,000 years
Figure 6: South China Sea Claims
Source: Voice of America
http://blogs.voanews.com/state-department-news/2012/08/15/china-bashes-western-meddling-over-south-china-sea/
to the Han dynasty. China says it can provide proof
from the 13th century and, further, that in 1935 it
published the full names of the 132 islands or so
(unsurprisingly estimates of the numbers involved
vary based on claims and definitions which are not
clear) in the South China Sea, including Huangyan
Island (also known as Scarborough Shoal, where there
was a stand-off with the Philippines this year). China
points out that its vessels have long been fishing
as well as conducting scientific exploration, radio
communications and sea traffic in the area, and that
official recorded statements by the Chinese leadership
reaffirm China’s control of the territories. This historical
basis for its claims notwithstanding, Beijing points out
31
 that Article 2 of the Law of the People’s Republic of China on the Territorial Sea and Contiguous Zone of 1992
includes all the claimed islands and was not disputed by any country at the time (including the Philippines).
According to the Chinese, the Philippines only started making public claims after mid-1997, culminating in
the amendment of the Philippines Territorial Sea Baseline Act in 2009 – before then, official maps of the
Philippines all marked Huangyan Island as outside Philippines territory. The Philippines, in contrast, contend
that from 1734 colonial maps showed Scarborough Shoal as part of its territory. Beijing counterclaims that
the 1734 maps were drawn by a missionary and were not official, whereas China had itself produced an
official map in 1279 which shows that it discovered Huangyan Island.

All very substantive. Indeed, from the Chinese point of view, formidable in respect of its wider South China
Sea claim and especially in regard to Scarborough Shoal. If so, the Philippines has responded, why not take
the matter to the International Tribunal on the Law of the Sea established by the UN Convention on the
Law of the Sea (UNCLOS), to which both countries are parties, or to the International Court of Justice (ICJ),
knowing full well China had always ruled this out. Some contend the Philippines is seeking to score a moral
point, others that it is willing to take a chance as it has little to lose. State attitudes to the settlement of
international disputes by judicial means or arbitration is a vexed matter not amenable to easy generalisation.14
Nevertheless, the greater the expanse of territory involved the less likely states are to subject its status to
judicial determination, and major powers have been averse to any kind of reduction of their super-sovereignty
on most matters, let alone one relating to territorial extent. China, of course, is in the good company of the
United States in this, and its stance on judicial arbitration will not change. It would be better to recognise
this reality and to find other ways to resolve the disputes peacefully.

Trying to do so without antagonising one party or another is particularly difficult given the bewildering
number of claims and the wealth of resources at stake. The Philippines has not always been consistent in the
pursuit of its claims. Between 2003 and 2005, it broke ranks with ASEAN and signed a number of energy
cooperation agreements with China. PETROVIETNAM, Vietnam’s Oil and Gas Corporation, also signed the
agreement in 2005 for joint marine seismic survey in certain areas of the South China Sea with the Philippine
National Oil Company (PNOC) and the China National Offshore Corporation (CNOOC). In it the Philippines
‘made breath-taking concessions in agreeing to the area for study, including parts of its own continental
shelf not even claimed by China or Vietnam. Through its actions, Manila has given a certain legitimacy to
China’s legally spurious ‘historic claim’ to most of the South China Sea.’15 This agreement was allowed to
lapse by the Arroyo administration when it expired at the end of June 2008, following allegations of kickbacks
and corruption. Before the amendment to the Territorial Sea Baseline Act in 2009, debate in the Philippines
was divided between the Senate and the House of Representatives, with the former choosing to define the
Spratlys only as a ‘regime of islands’ outside the baselines and the latter expressly including Scarborough
Shoal and the Spratlys within the country’s territorial baselines. The Senate’s version was passed in February
2008 – before the 2009 amendment reversed this position.

Since June 2010, the Aquino administration has taken a firmer stand in furtherance of Filipino claims. It
is difficult to say if the Philippines has been encouraged by Hillary Clinton’s notice of American interest in
the South China Sea, but there have been indications of a willingness to assert Philippine interest. In April
2012, a two-month stand-off ensued in Scarborough Shoal when a Philippine warship tried unsuccessfully
to apprehend eight Chinese vessels ‘caught’ fishing in disputed waters. The incident showed a number of
Filipino dilemmas in the defence of its claims, with its desire to take action restricted by a lack of military
capability and an economic dependence on China for trade and tourism. The Philippines has also sought to
engage the US, but has been unable to draw either the State Department or the Navy into particular dispute

14 See Munir Majid, Asian and African Attitudes to the Settlement of International Disputes by Judicial Means, unpublished PhD thesis, Department of
International Relations, London School of Economics and Political Science, 1978
15 Barry Wain, Manila’s Bungle in the South China Sea, Far Eastern Economic Review, January/February 2008.

32
situations; whilst the US expressed robust official support during President Aquino’s Washington visit in June
this year, there was no specific commitment to any particular South China Sea situation. The Philippines has
also sought full ASEAN support, but at the same time not been averse to going-it-alone, and appealed to
international law, but only when serving national interests. It might be time for the Philippines to pull itself
together and reflect more deeply on a truly regional approach to the solution of the issues involved.

Vietnam has had even more difficulty confronting China’s claims. Two out of three sets of territorial issues – the
land border and delineation of the Gulf of Tonkin – have been largely resolved. The outstanding South China
Sea overlapping sovereignty claims, particularly the Paracels and the Spratlys, put Vietnam in an unenviable
position vis-à-vis China. Hanoi sees its new naval association with the US as a help, but keeps this arrangement
limited, reluctant put all its eggs in one basket.16 Vietnam also looks to Japan, South Korea and Australia for
‘support’, as well as to India and Russia. In September last year Hanoi signed an agreement with New Delhi
to jointly explore in disputed waters, and the following month entered into a memorandum of understanding
on defence cooperation enhancement, and has also been trying to entice Russia into oil and gas exploration.
Clearly, the idea is to increase the number of nations with a stake in a peaceful Southeast Asia.

Vietnam has an advantage in having the opportunity to soothe relations with China through communist party-
to-party fratricidal discussions, but has the greater disadvantage of having the most number of conflicting
claims in the South China Sea with Beijing – framed by a thousand year history of conflict. Bilateral relations
over the dispute have been bad, with accusations, skirmishes and threats. They have been exacerbated by
Vietnam’s agreement to allow oil exploration by international energy companies, Chinese attacks on Vietnamese
fishing boats, Beijing’s plans for tourist cruises in the disputed Paracels and military exercises in the region, and
demonstrations and protests in Vietnam against China’s ‘hegemonic ambitions’. In January 2008 the China-
Vietnam Steering Committee met in Beijing in an attempt to calm things down following the Chinese decision
to create an administrative centre on Hainan for the Spratlys, Paracels and Macclesfield Bank in December
2007. This initiative failed, and in June this year Vietnam passed a law claiming sovereignty over the Paracels
and Spratlys, as China raised Sansha City in the Paracels to prefecture level and 45 legislators were elected
in July to govern the 1,100 Chinese people in the claimed areas, covering 772,000 square miles of the South
China Sea.17 To underline all this, later in July China’s Central Military Commission approved deployment of
two military garrisons – one army, the other navy – to guard the disputed islands.

The deployment caused the US State department to issue a statement of concern over the escalation, obtaining
in return China’s rejoinder that the Americans had no right to interfere in a matter of its sovereign jurisdiction.
For good measure, the US Deputy Chief of Mission in Beijing was summoned to the foreign ministry. China feels
its actions are unjustly selected out for criticism while the provocative activities of other claimants, particularly
the Philippines and Vietnam, are glossed over or ignored. China has thus become less tolerant of criticism
and more insistent on its sovereign rights. Chinese state-controlled newspapers have been particularly shrill in
their insistence on China’s freedom of action. The China Daily, in a commentary on 30 July this year, accused
the US of double standards and reflected it was ‘Better [for China] to be safe than sorry… [and] to safeguard
its sovereignty and territorial integrity.’ More broadly, it was of the view that the United States’ strategic shift
is intended to contain China. ‘The current security environment for Beijing is the most complex and severe
since the foundation of the People’s Republic of China’, an assessment that led it to conclude that, with
respect to safeguarding national sovereignty and territorial integrity, no country would renounce the use of
force. Alongside such thinly-veiled official warnings is a concentration of opinion calling for China to take a
more aggressive stance, including from maritime agency chiefs, PLA officers and military advisers. An official

16 During a discussion with the LSE Asia Research Centre on 8th November 2011, a delegation from Vietnam which included government officials contended
that while ASEAN talks and talks, China talks and takes. There was a wish for unilateral declarations of interest on issues in the South China Sea, for example by
the UK. A multi-layered approach was preferred from ASEAN to EAS to the wider international community.
17 China wrested de facto control of the Paracels following the naval showdown in 1974 when (then South) Vietnam withdrew. A 2,700 meter long runway
was completed in Sansha city in 1990. Beijing claims to have established an administrative apparatus to manage its claimed islands since 1959.

33
 with China Marine Surveillance argues that ‘China
now faces a whole pack of aggressive neighbours
headed by Vietnam and the Philippines and also a set
of menacing challengers headed by the United States,
forming their encirclement from outside the region.’
Responding to developments in July, Major General
Zhu Chenghu, who once urged the use of nuclear
weapons if American forces intervened in a conflict
over Taiwan, accused the US of ‘meddling’ and said it
was ‘unreasonable and illegal’ for the Philippines and
Vietnam to claim territory that historically belonged
to China, claiming that there had been no disputes
in the South China Sea until the discovery of large
amounts of gas and oil reserves in the 1970s. Cui Liru,
President of the China Institutes of Contemporary
International Relations, a Beijing think-tank closely
linked to China’s intelligence services, has also been
urging a tough stance. At the World Peace Forum in
Beijing in June he argued that China needed to do
more in terms of demonstrating its sovereignty. Others
at the forum voiced the view that China’s patience had
been tested to its limits and there was no room for
further tolerance. Such official views are reflected on
the ground, where formerly Hainan-based fishermen
now in Sansha City ask why China should tolerate
challenges to its sovereignty now that it is so strong.
The situation in the South China Sea has deteriorated
precipitously. From the latter half of 2011 until early
2012, it was characterised by a more moderate
approach from the Chinese, and a focus on
diplomatic engagement, investment and trade with
neighbouring countries. This came to an abrupt end
with the Scarborough stand-off, and China has instead
become both assertive and reactive. Whether or not
Scarborough was a miscalculation by the Philippines, it
is now used by China to defend its claims to a domestic
audience. US Secretary of Defence Panetta’s historic
Cam Ranh Bay visit in June and the Vietnamese law
of the sea passed that same month, similarly allowed
China to claim encouragement and abetment by the
US. China has rapidly come to view the disputes as a
tool being used by the Americans to contain China,
just as the US becomes more engaged in the region
through the pivot. Nonetheless, China is once again
making peaceable gestures with respect to the South
China Sea issues. In September Xi Jinping, the soon-
to-be-appointed Chinese leader, gave the assurance to
34
ASEAN leaders at a trade fair in Nanning that China
wishes to solve the disputes peacefully. At the ASEAN
Maritime Forum in Manila in October, China once
again offered a grant for maritime cooperation in the
South China Sea. It remains to be seen whether such
gestures reflect a substantive softening of the Chinese
position or merely the ebb and flow of diplomatic
manouvering. What is surer is that states with a stake
in the South China Sea do not want to be fully exposed
to the caprice of the Chinese.
China’s actions in its sea disputes have been bewildering
and fraught with threat, and its threat and use of
force have alarmed states in Southeast Asia. Such a
belligerent foreign policy risks neutralising the goodwill
Beijing has built in the region over almost two decades.
While other South China Sea disputants, particularly
the Philippines and Vietnam, are not exactly innocent,
China has shown a disproportionate propensity to
punish and to physically assert its sovereign claims
in a manner that is disconcerting, and which frankly
frightens regional states.
In the complexity of causes that have conspired to
incite China’s actions, its unsteady and erratic hand
reveals a desire to be feared more than respected.
Such a populist bellicose attitude cannot be allowed
to rise to the level of official policy in a great power
which claims to seek peaceable relations, even if as a
hegemon. It is not just the threat or use of force that
is a matter of concern. It is also the indifference to
the interdependent economic good that such actions
put at risk.
The beneficiary of China’s strategic misjudgment will
be the United States. The Chinese of course see the
Americans as the cause of their discomfiture, but their
inability to ride the US pivot towards Southeast Asia
will ensure its success. If the Americans had intended
to contain China in the rebalance in Asia-Pacific, they
could not have asked for a better response than what
Beijing has offered in the past of couple of years.
Yet the strategic contest in the region is by no means
settled. The US still has to manage its relations with
China, which extend far beyond the regional canvas.
The dilemma the US cannot escape is how to integrate
into the international system a rising power which
will eat into American predominance in the world,
even if it will remain the preeminent power for a long
time to come. The instinct to attempt to snuff out the
rising power has to be resisted, even if such a strategy
were possible. Washington has so far managed this
well, in spite of the pressures of domestic opinion
from both sides of the partisan divide. In Southeast
Asia China has become economically preeminent,
and whatever China’s strategic mis-steps over the
South China Sea disputes, the United States will not
displace China’s economic importance in the region.
The test for the United States is to manage its relations
with China in Southeast Asia as elsewhere without
reflecting China’s self-righteousness with its own sense
of exceptionalism. The US must show it has come back
to Southeast Asia not to displace China but to be a
counterweight and a force for the regional good. ■

35
 The Theatre of
Competition

36
Indochina
Ang Cheng Guan

T he renewed US engagement in Asia is one manifestation of the unfolding rivalry between

the two superpowers, United States and China. One part of Asia where we can expect to see
especially keen competition for influence is Indochina. To get a sense of how the relationships
between three Indochinese states – Vietnam, Cambodia and Laos – and the two powers will
develop, it is necessary to trace the trajectories of their relationships from the 20th century to
the present.

The Cold War Years

The diplomatic relationships of the Indochinese countries (Vietnam, Cambodia and Laos) with China and
the United States have until recently been framed by the exigencies of the Vietnam War.

In the years immediately following WWII, Ho Chi Minh tried to secure American support for Vietnamese
independence and unification. Had the Americans been forthcoming, Hanoi would not have had to
turn to the Chinese communists after 1949. Indeed, in 1946, Ho chose to put up with the French rather
than have the Chinese entrenched in Vietnam. For the United States, the ‘loss’ of China popularised the
theory that communist gains in Indochina would set off a domino effect in the region, and as a result
the United States’ increasing commitment to the Vietnam War drove deeper Sino-Vietnamese ties. The
strength of China and Vietnam’s common interests against the United States during this period was
such that differences were swept under the carpet.

Predictably, Vietnam’s relationship with China began to unravel around the time of the Sino-US
rapprochement – when the war was still on-going – and culminated in complete breakdown in the
summer of 1978, swiftly followed by the Sino-Vietnamese War of February 1979. Throughout the 1980s,
Vietnam consequently became dependent on the Soviet Union as a countervailing force against China.
Gorbachev’s decision to normalise relations with China put pressure on Vietnam to end its occupation
of Cambodia (in parallel with the Soviet withdrawal from Afghanistan) and reassess its relationship with
China, leading to a full restoration of diplomatic ties in 1991. The United States and Vietnam normalised
relations in 1995, two decades after the end of the Vietnam War.

Cambodia’s post-WWII diplomacy with China and the United States was also very much connected to
the Vietnam War. Until his ouster in 1970, Sihanouk struggled to prevent Cambodia being sucked into
the war. Relations with then-South Vietnam and Thailand (which Sihanouk saw as client states of the
United States) were made more problematic by border disputes, and Sihanouk turned to China, who
had endorsed Cambodia’s policy of ‘strict neutrality’. Yet at the same time, Sihanouk was concerned
the implications for his royal line of any communist victory in Vietnam, and therefore toggled between
both China and the United States. After the ouster of Sihanouk by the US-backed General Lon Nol
in 1970 and the subsequent civil war that ended with the victory of the Khmer Rouge in 1975,
the country moved decisively into the orbit of its Chinese bankroller until the Vietnamese occupation
in 1979. Following Vietnam’s withdrawal in 1989 and the Paris Peace settlements of the Cambodia
problem in the early 1990s, China resumed ties with the restored Kingdom.

37
 Laos is the poorest member of ASEAN, and without
much to offer in terms of raw materials, the
country is often overlooked by analysts studying
the geopolitics of the region. But landlocked Laos is
actually of significant strategic importance. In 1960,
when Eisenhower briefed the incoming President
Kennedy, it was Laos rather than Vietnam that was
the focus of his briefing. Although Laos faded into
the background after the 1961 Geneva Conference,
its pivotal position in the regional Cold War struggle
never really diminished. Laos is the only Indochinese
country that has maintained unbroken diplomatic
ties with the United States from independence to the
present, despite the deterioration in relations after
the Pathet Lao came into power in 1975. Laos also
maintained unbroken diplomatic relations with China,
despite siding with Vietnam over its 1979 invasion of
Cambodia, resulting in the downgrading of ties to
the charge d’affaires level until the settlement of the
Cambodia problem.
POST-COLD WAR
Vietnam, Cambodia and Laos joined ASEAN after the
end of the Cold War in order to become members of
a club that would provide them legitimacy and gain
them acceptance in the international community.
They also hoped to buttress their independence as
sovereign states. One common concern was China’s
ambitions, although the degree of concern amongst
the three states varied.
A new phase in the relations between the three
Indochina states, the United States and China thus
began with the end of the Cold War. It was a slow
process of reconciliation for all parties that took up
much of the last decade of the 20th century and the
first decade of the new century. This was particularly
so with the United States, as both American and
Indochinese policymakers took a long time to discard
the baggage of the Cold War years.
38
China
Having emerged from the Cold War as the three
poorest countries in region, the Indochinese nations
saw economic benefits from improving relations with
China. The Chinese economy was then developing at a
rapid pace and showed potential of becoming a global
economic power in the future. For the two smaller
Indochina countries – Cambodia and Laos – China
also served their interests as a bulwark against Thai or
Vietnamese hegemony, particularly since historically
China had never physically invaded Cambodia or Laos.
Beijing was also keen to improve relations with its
immediate neighbours, strategically located along its
southern border in what some writers have dubbed
‘China’s backyard’. China’s good neighbourliness in
Indochina stemmed from its desire for a peaceful and
stable external environment to allow it to concentrate
on its own economic development; the countries of
Indochina, if not properly managed, could disrupt or
contain its aspiration to be a global power.
Soon after the normalisation of relations in 1991, both
Vietnam and China moved to resolve their outstanding
bilateral issues, of which there were four. It took nearly
ten years before Vietnam and China agreed on the
demarcation of their land borders and the Tonkin Gulf
in 1999 and 2000 respectively, thus settling two of
the four issues. The remaining two - the sovereignty
dispute over the Paracel Islands and that of the Spratly
Islands persist till today. It is unlikely that Vietnam will
be able to regain sovereignty of the Paracels as they
are effectively under Chinese control. As for the Spratly
dispute, the involvement of other claimants makes it
more than a simple bilateral problem.
Cambodia took some years to coordinate a coherent
foreign policy after the 1993 elections conducted
by the United Nations, which saw the formation of
an uneasy coalition government led by Sihanouk’s
son Norodom  Ranariddh and Hun Sen. Since the
breakdown of that coalition in 1997, Cambodia
has been led by Hun Sen, whom Sihanouk once
described as a more astute politician (and an image
of himself) than his son Ranariddh. The Chinese had
been unwavering in their support of Sihanouk and
by extension his FUNCINPEC Party (led by Ranariddh),
while Hun Sen was seen as a Vietnam protégé.
However, after 1997, Hun Sen began taking proactive
steps to endear himself to China, most prominently
when he cut links with Taiwan and paid a visit to Beijing
to pay his respects. He also accepted China’s help in
building the National Assembly building after the
1998 elections which he won with a simple majority
and thereafter became the sole prime minister. Like
Sihanouk, Hun Sen has continued to maintain good
relations with Beijing (despite its previous support of
the Khmer Rouge). The Chinese have apparently now
concluded that between they prefer dealing with Hun
Sen to Ranariddh, and China is now Cambodia’s top
aid donor and foreign investor. In the aftermath of
the 45th ASEAN Ministerial Meeting (AMM) in Phnom
Penh in July this year which failed to produce a joint
communique – the first time it happened in ASEAN’s
history – the closeness of Sino-Cambodia relations has
been the subject of intense regional scrutiny.
As for Laos, the successful settlement of the Sino-
Laos frontier demarcation in 1992 has seen the
development of a thriving cross-border trade. China
has been actively competing with Vietnam for the
political allegiance of Laos, and in 2010, China
supplanted Thailand as the largest foreign investor
in Laos. According to Dominique Van der Borght of
Oxfam Belgium, Chinese projects in Laos are on a
large scale and have led to concerns in Vientiane that
China, Vietnam and Laos are competing to use Laos
as ‘an extension of their territory.’
The China Threat
Since the 1990s, there has been an uneasiness among
Southeast Asian countries that China’s rise might
constitute a threat to the stability of South East Asia.
Seeking to mitigate its neighbours’ concerns, Beijing
adopted a diplomatic charm offensive, emphasising
that economic interdependence amongst the ASEAN
countries and China was beneficial for all. The most
notable examples are China’s decision not to devalue
its currency during the Asian Financial Crisis (1997),
and the 2001 proposal to establish an ASEAN-China
Free Trade Area (ACFTA) which came into effect in
January 2010. The most recent is an in-principle
agreement to create an Asian Free Trade Area.
Yet China’s efforts to co-opt its neighbours are not
confined to economics. In 2003, China signed the
ASEAN Treaty of Amity and Cooperation (TAC), which
commits Beijing to ASEAN norms in inter-state relations
– mutual respect, non-interference in others’ internal
affairs, settlement of disputes in a peaceful manner,
and the renunciation of the use of force. However,
despite Chinese assurances, regional neighbours are
yet to be fully persuaded that China will never seek
hegemony. Such reservations aside, in the two decades
after the end of the Cold War it remained essential
for the Indochinese states to maintain good relations
with their neighbour – a burgeoning economic (and
in time potential military) giant – especially when
there was no other countervailing power that they
could count on.
United States
Compared to Beijing, Washington was slow to improve
relations with the three Indochina countries. It was not
that Indochina was reluctant to win American favour
– in the period after the end of the Cold War, the
United States was universally recognised as the most
powerful country in the world – but rather that the
importance of Southeast Asia waned considerably in
Washington following the Vietnam War. With the end
of the Cold War, Southeast Asia also had to compete
with a new Europe and events in the Middle East for
Washington’s attention. Washington did re-orient its
attention towards Southeast Asia after 9-11, but its
interest was largely confined to the issue of terrorism
and thus had little impact on its relations with the
Indochinese states, as Vietnam, Cambodia and Laos
do not have substantial Muslim communities.
The top priority for Indochina and China since the
end of the Cold War has been economic growth, jobs
and trade. The United States expected political and
economic reforms as prerequisites for closer bilateral
relations, whereas China was less constrained by
such concerns, if at all. The formation of the ASEAN
Regional Forum in 1994 was a tool not simply to tie
an emerging China to a multilateral network, but to
keep the US engaged in the region as well. Indeed,
China’s diplomatic successes following the end of
the Cold War were to a large extent enabled by the
United States’ apparent lack of interest in the region
as a whole.
39
 The main impediments to enhancing Indochina-US
relations were the baggage of the Vietnam War and
America’s focus on human rights and corruption
in those countries. Although diplomatic relations
between the US and Cambodia were established
after the UN-sponsored election in 1993, relations
were cool as a consequence of Hun Sen’s seizure of
power in 1997 and his subsequent poor human rights
record. Relations only improved from around 2006-
07 when US officials began to become cognisant of
the increasingly close ties between Phnom Penh and
Beijing. In early 2007, Washington lifted a decade-
old ban on direct aid to Cambodia, which observers
viewed as a harbinger of better US-Cambodia
relations. In 2010, US Secretary of State Hillary Clinton
used the occasion of her visit to Phnom Penh to
urge Cambodians to diversify their international
relationships and not to be over-dependent on China,
by which time the Chinese had already established a
significant presence in the country.
In the case of Laos, although diplomatic relations
with the US were never broken, the relationship was
plagued by the legacies of the Vietnam War, including
concerns about prisoners of war and personnel missing
in action, unexploded munitions, the poor treatment
of the Hmong by the Lao government, and the Laotian
suspicion that long after the Vietnam War the CIA
continued to be in league with the Hmong leader Vang
Pao to undermine the Lao regime. Laos did not gain
Normal Trade Relations (NTR) status with the United
States until 2004, a prerequisite under US law for any
bilateral trade agreement. The US arrest of Vang Pao
in 2007 apparently gave the relationship a fillip, and
his death in 2011 finally closed this chapter in US-
Lao relations even if not fully. Hillary Clinton visited
Vientiane in July this year, the first Secretary of State
to do so in almost five decades.
Vietnam normalised relations with the US in 1995
(just before its admission into ASEAN) but was only
given NTR status in 2001. Like Laos, the legacies of
the Vietnam War, notably the POW/MIA and Agent
Orange issues impeded the development of better
bilateral relations, as conservative elements in the
Vietnamese leadership remained suspicious of the
United States. Since President Clinton visited Vietnam
40
in 2000 – the first US president to do so – relations
have been improving, despite occasional hiccups over
trade and human rights issues.
Across the post-Cold War era and until very recently,
US relations with the Indochinese states were very
much driven by Washington’s broader interest in
and engagement with ASEAN. For example, the US
normalised relations with Vietnam on 11 July 1995,
just before Vietnam became a full-fledged ASEAN
member in the same month, but bilateral relations
were slow to develop thereafter. After years of debate,
Laos was finally granted normal trade status in 2004,
the year Vientiane assumed the rotating ASEAN chair.
A NEW TURN IN INDOCHINA-US-CHINA
RELATIONS?
In January 2012, President Obama announced that
the US intends to strengthen its presence in Asia,
notwithstanding the largest cuts to the United
States’ defence budget since the end of the Cold
War. The announcement also marks the beginning
of a re-invigoration of US-Southeast Asia relations.
Washington’s new-found concern about a rising
China at long last coincides with the long-running
exhortation of the Southeast Asian countries for the
US to be more engaged in the region in order to
balance China.
It is, however, too soon to tell how the triangular
relationships between the Indochinese states, the
US, and China, will develop. As noted above, Hillary
Clinton visited Laos in July this year after a five-decade
hiatus, which is a good start. US-Vietnam relations
are expected to continue to improve. Of all the
Southeast Asian capitals, Hanoi is most enthusiastic
about the US presence in the region; certainly, of the
three Indochinese states, it is Vietnam that has the
most problematic relations with China, and looks
mainly - although not exclusively- to the US as a
countervailing force against Beijing. As for Cambodia,
their exceptionally close ties with China are no secret.
Lee Kuan Yew was reported to have complained that
China’s close ties with the country (as well as Laos)
meant that within hours, everything that is discussed in
ASEAN meetings is known in Beijing. What is perhaps
unexpected is Phnom Penh’s failure, in its capacity as
ASEAN Chair of the 45th ASEAN Ministerial Meeting (AMM) in July 2012, to produce a joint-communique,
and soon after it was reported that China had pledged more than $500 million in soft loans and grants to
Cambodia, which was interpreted by many as a ‘reward’ to Phnom Penh for putting China’s interests on the
issue of the South China Sea dispute ahead of the wider ASEAN community. Cambodia will need to recover
the trust of its ASEAN colleagues, as well as better balance its relationship with China and its responsibilities
as a member of ASEAN. The United States, too, will have to work much faster to improve relations with
Cambodia and Laos if it hopes to steer Phnom Penh and Vientiane away from their over-reliance on China.

CONCLUSION

Vietnam, Cambodia and Laos recognise that they each have to live with a neighbour
that is generally projected to be the world’s largest economic power sometime in the
coming decade, with the implication that the 21 st century will be ‘China’s century’.
Each recognises the reality distilled by Lee Kuan Yew when he said that ‘your neighbours are not your best
friend, wherever you are’, and that diplomacy is easier with ‘those who are farther afield with whom we
can talk objectively’.

History has shown that none of the Indochinese countries willingly choose to be under the tutelage of China.
Vietnam, Laos and even Cambodia want the US to be engaged in the region. They all want to have good
relations with Washington. But the United States’ economic and financial difficulty is troubling, and there
is uncertainty about America’s long-term commitment to the region, despite the Obama administration’s
strategic pivot to Asia. In Indochina, there has been a revival of the debate about American decline which
receded from prominence in the 1990s after the end of the Cold War appeared to refute Paul Kennedy’s
1989 thesis in The Rise and Decline of Great Powers. On that broader debate, the jury is still out, but neither
Vietnam, Cambodia nor Laos want to be caught flat-footed. Collectively, they all seek a US presence in the
region as a hedge against Chinese dominance, but fear that were such a presence to become confrontational
it would oblige them to choose between Washington and Beijing, the very choice that to date each has
sought to avoid. ■

41
 Indonesia and the Emerging
Sino-US Rivalry in Southeast Asia
Rizal Sukma

R ecent developments in the relationship between the United States (US) and China have
heightened a sense of uncertainty about the future of East Asia. The two major powers
seem to be on a path towards strategic rivalry, competing for influence. The US, for example,
has begun to undertake several initiatives to deepen its alliance system and military presence
in the region. China’s policy towards the region has also created the impression that it, too, is
seeking to expand its power projection and influence. As signs of strategic rivalry between the
two great powers became increasingly evident, Southeast Asian countries began to ponder
the future directions of regional politics. The Association of Southeast Asian Nations (ASEAN),
which had tried to provide a web of multilateral platforms for major powers’ engagement and
interaction in the region, now has to face the possibility that a Sino-US rivalry might polarise
ASEAN, turning the region once again into a theatre for great power competition.

As a member of ASEAN, Indonesia certainly feels this predicament. Jakarta cannot escape the imperative
of having to conduct its foreign policy in the context of the complex relationship between the US
and China. Leaning to one side is not an option. Indonesia needs and wants both the US and China
as friends and partners, and would not want to see the superpowers become rivals, competing for
influence in its neighbourhood. Moreover, Indonesia still believes that Southeast Asia should be free from
any competition among extra-regional powers. However, Indonesia’s strategic choices and responses
are limited. As Jakarta is not in the position to dictate the strategic directions of Beijing-Washington
relations, it pursues a policy of ‘independence’ by building close relationships with both powers. At the
same time, Indonesia also works with other ASEAN countries to prevent Sino-US relations from sliding
into a strategic rivalry. This is a position that reflects not just geopolitical realities, but that has been
influenced by the primacy of domestic politics in Indonesia’s foreign policy.

INDONESIA’S STRATEGIC INTERESTS

For most Indonesian elites, Southeast Asia and ASEAN constitute the main area of interest in Indonesia’s
foreign relations. While the region has been described as ‘the first concentric circle’ of Indonesia’s foreign
policy, ASEAN is referred to as its sokuguru (cornerstone). Consequently, the stability, security and
prosperity of Southeast Asia are Indonesia’s core strategic interests. Indonesia continues to promote the
idea of an independent Southeast Asia, capable of maintaining its autonomy in the face of rivalry and
competition for influence among extra-regional powers. It presents itself as a strong advocate of ‘regional
solutions to regional problems’ and affirms that the security of Southeast Asia cannot be genuinely
attained through military alliance and collective defence arrangements either among regional states or
between a regional state with extra-regional power. Indonesia instead believes that such regional vision
can only be attained through a cooperative security system among regional countries, such as ASEAN,
and between ASEAN and its regional partners, such as in the ASEAN Plus Three (APT) process and the
ASEAN Regional Forum (ARF).

42
However, the context within which Indonesia has to
pursue its vision of regional order has become more
complex. East Asia in the 21st century is an area of
increasingly diffuse power, with significant implications
for regional and global power structures. Power shifts
taking place in the region point to the redistribution
of influence among key players. The rise of China
constitutes the most salient aspect of such changes.
Over the last thirty years, China has consistently
demonstrated its ability to sustain impressive economic
growth rates at an average of 10 percent. Along with
its economic development, China’s military capability
has also improved significantly. As its economic power
and military might increase, China has now emerged
as the most influential actor in the region. India is
also catching up as a major player. Japan, while still
in deep domestic political and economic trouble,
cannot be written off yet. Other regional powers –
such as South Korea, Australia, and ASEAN – are not
inactive bystanders. Moreover, power is also diffusing
to non-state actors – the private sector, civil society
organisations, organised crime, and terrorist groups.
The US remains the most powerful nation on earth,
but others are also on the rise.
Indonesia, like many other regional countries,
recognises the potential implications of such changes
for the region. That has been manifested in Indonesia’s
concerns over a number of issues. The first concern
primarily relates to the question of China’s rise,
particularly how China is going to use its new stature
and influence to pursue its national interests and
objectives in the region. However, for Southeast Asian
states, including Indonesia, China’s rise is not conceived
in terms of ‘military threat’, but more in terms of
China’s future role and place in the region, and how
it will affect the regional security architecture. While
China has consistently demonstrated its commitment
to a peaceful rise and played a positive role for the
stability and security of the region, the uncertainty
surrounding China’s rise remains a strategic challenge
for regional states. Indonesia therefore remains anxious
about how China is going to use its newly-acquired
wealth and military power.
Second, the pre-eminent role of the United States in
East Asia remains beyond doubt. However, its role
and influence in the region are increasingly being
limited by the rise of China, both in terms of Anti-
Access/Area Denial military capabilities and the
incentives China’s sheer economic size creates for
regional states. The US is therefore confronted by the
necessity to maintain and ensure its political primacy,
economic interests, and military preponderance, and
has declared a renewed commitment and interest to
play a more active role in the Asia-Pacific, especially
in East Asia. This new intention has been reflected in
the Obama administration’s ‘pivot’ strategy towards
the Asia-Pacific. The moves to strengthen its security
and defence relationships with Australia, Japan, the
Philippines, Singapore and Vietnam demonstrate the
US’ commitment to match such policy declaration
with actions. The Pentagon has reinforced its military
presence in the region by stationing 2,500 marines in
Australia and two littoral combat ships in Singapore,
and is planning to station 60 percent of its naval fleet
in the Asia-Pacific by 2020. Equally important, the US
has also taken some initiatives to deepen its economic
role in the region, demonstrated most markedly by
its decision to push for the Trans-Pacific Partnership
(TPP) fair trade agreement.
Third, as China’s rise becomes inevitable, and the US
feels obliged to pursue a re-balancing strategy, it is
far from certain how the Sino-US relationship is going
to evolve in the future. While very few would want
to see a strategic rivalry develop between the two
great powers, recent developments suggest that this
might be the case, indeed, the possibility of Sino-US
rivalry is no longer remote, but rather an emerging
reality. As a rising power with its own interests, China
seems to see the US as the only power that might
limit its regional aspirations. Meanwhile, the US is
clearly opposed to the rise of a new power that might
pose a challenge to its strategic pre-eminence in East
Asia. At the same time, strategic rivalry between
the US and China over maritime access, supremacy
and dominance in two strategic oceans, the Indian
Ocean and the South China Sea, is also of a particular
concern. Rich in natural resources and crucial for sea
43
 lines of communication, these two oceans are of
significant strategic value for fundamental national
interests, not only of major powers, but also the entire
region and beyond.
These three strategic developments – the rise of
China, the US’ attempt to retain its primacy, and the
implications of both for Sino-US relations – could
undermine Southeast Asia’s regional autonomy in
two ways. First, any Sino-US strategic rivalry has
the potential to polarise ASEAN, turning the region
once again into a theatre for the pursuit of primacy
among major powers. For example, differing responses
from ASEAN member state to the US’ decision to
station marines in Darwin, Australia, highlighted
the differences in strategic perceptions of individual
member states. Second, if ASEAN becomes polarised
amid the growing rivalry between the US and China,
ASEAN’s role as ‘a manager of regional order’ would
become marginalised, which, in turn, would put
ASEAN’s centrality for regional states under serious
stress. Both scenarios would pose a serious challenge
to Indonesia’s vision of an autonomous Southeast Asia
free from rivalry, and extend competition for influence
in the region. Therefore, the main challenge facing
Indonesia and its regional partners is how to prevent
the return of power politics to the region. Indonesia,
together with other ASEAN countries, clearly expects
both the US and China to exercise strategic restraint
and emphasise cooperative elements in their bilateral
relationship.
ELEMENTS OF INDONESIA’S RESPONSE
Indonesia has responded to these emerging dynamics
by relying on three approaches. First, ever since
the revolution, Indonesia’s foreign policy has been
committed to abide by the principle of bebas-aktif
(free and active). This normative principle, first declared
in 1948, requires Indonesia not to take sides in any
rivalry between great powers. Indonesia’s relationship
with China, which was suspended in 1967 until the
restoration of diplomatic ties in August 1990, has
improved tremendously over the last two decades.
Significant changes in China’s foreign policy since
early 1980s, especially the termination of support
for communist insurgencies in Southeast Asia and
44
the change in its policy towards overseas Chinese,
effectively removed Indonesia’s suspicion of China.
In April 2005, Indonesia even concluded a strategic
partnership agreement with China, which serves as the
basis for what is fundamentally a stable and mutually
beneficial relationship. At the same time, Indonesia’s
relationship with the US, which was strained during
President George Bush administration, especially due
to differences regarding the war in Iraq and the way
the US pursued its ‘war on terror’, has now taken a
new turn. Under the Obama administration, the US
has begun to view Indonesia as an important regional
partner, and both Indonesia and the US are now
committed to forging a closer relationship under the
Comprehensive Partnership Agreement (CPA), which
has already brought significant agreements in science
and technology cooperation, a private investment
corporation and a credit facility to facilitate bilateral
trade, and a framework contract arrangement on
defence cooperation.
Indonesia’s second approach elevates the principle of
bebas-aktif to the regional level and seeks, together
with other ASEAN states, to create a ‘dynamic
equilibrium’ among major powers in Southeast
Asia. Indonesia realises that no regional country can
address emerging security challenges by working
alone. In this regard, regional cooperation becomes
relevant and important to address security challenges
stemming from strategic uncertainties brought about
by geopolitical changes. Indonesia has played an active
role in shaping the emerging regional architecture
in the region by ensuring ASEAN’s centrality while
encouraging greater participation by other major
and regional powers in the regional processes. It
supported the inclusion of India, Australia and New
Zealand in the East Asia Summit (EAS) and, in 2010,
invited the US and Russia to become members of the
grouping. Indonesia has also taken steps to encourage
the consolidation of ASEAN. Through the EAS process
– together with other processes such as the ASEAN Plus
Three (APT), the ASEAN Regional Forum (ARF), and the
ASEAN Defence Ministerial Meeting Plus (ADMM-Plus)
– Indonesia supported ASEAN’s initiative to provide an
institutional framework that would hopefully facilitate
a cooperative relationship among the major powers,
especially between the US and China.
Third, Indonesia has sought to improve its bilateral
relations with other major and middle powers in
the Asia-Pacific. Indeed, Jakarta has signed Strategic
Partnership agreements with Japan, India, Australia and
South Korea in the past decade. Japan is Indonesia’s
largest trade partner and continues to occupy an
important place in Indonesia’s foreign relations,
particularly in terms of economic development. The
two countries have held regular bilateral summits over
the past few years in order to strengthen the concrete
areas of cooperation under the Strategic Partnership.
The recent partnership with India reflects both
Jakarta’s analysis that India is increasingly becoming
an important East Asian power on its own right, and
India’s recognition of Indonesia’s importance within
ASEAN. Australia is Indonesia’s closest neighbour and
the interests of both countries have long been closely
linked, a fact reflected in the depth of substantive
cooperation in sectors such as fisheries and criminal
law enforcement. South Korea is Indonesia’s sixth
most important trading partner (after Japan, China,
Singapore, the EU and the US) and a major source
of foreign direct investment to Indonesia. Since the
signing of the strategic partnership in 2006, bilateral
relations have expanded beyond the traditional areas
of trade and investment cooperation to include security
and defence, with South Korea supplying 16 T-50
Golden Eagle trainer jets to Indonesia. Indonesia’s
partnership with these major and middle powers
clearly reflects Jakarta’s desire to shape a regional
order where other powers than the US and China
can also have a role to play.
Indonesia’s response to the emerging Sino-US rivalry
can therefore be described as a ‘hedging strategy’
against uncertainty in the intentions of both the US
and China. Despite recent improvements in bilateral
relations, Indonesia continues to view the US as a
hegemonic power with whom it has many converging
and diverging interests. For example, while Indonesia
welcomes US strategic commitment and regional
engagement, Jakarta has been critical of US policy
towards Middle East, especially its support to Israel
at the expense of Palestine. Until very recently, the
relationship with China has long been problematic.
Although China’s rise to great-power status has
become inevitable, Jakarta remains uncertain whether
a powerful China will continue to be a ‘benign’ partner.
Indonesia’s hedging strategy is therefore aimed at
moderating the potentially negative implications of
the rise of China for regional order and simultaneously
reducing America’s dominance as a hegemonic
power in the region. While the US presence and
engagement in Southeast Asia is needed for the first
objective, the rise of China works to serve the latter.
In the tradition of bebas-aktif, a central element in
Indonesia’s response to the rise of China and the
primacy of the US in the region has been a familiar
sense of distrust toward extra-regional great powers,
driven by historical experience that breeds a strong
sense of nationalism, competitive domestic politics
and a sense of regional entitlement.
NATIONALISM, DOMESTIC POLITICS
AND REGIONAL ENTITLEMENT
From the very outset of its post-colonial existence,
Indonesia has expressed doubts over the role of extra-
regional powers in Southeast Asia. This attitude is
closely influenced by the country’s experience in
securing its independence that, in turn, created
strong nationalist sentiments. In the 1950s and 1960s,
Indonesia’s experience dealing with internal dissident
movements with the backing of external powers
strengthened the received wisdom in Jakarta that
extra-regional powers could pose a problem to its
security interests. Second, nationalism manifested in
the principle of bebas-aktif, still guides the conduct of
foreign relations in the more democratic Indonesia of
today. Thus, the most striking expression of nationalism
in foreign policy has been evident in Indonesia’s
sensitivity to the role of extra-regional powers.
Segments of Indonesia’s elite and general public still
harbour the view that major powers will always try to
reap unfair advantages at the expense of Indonesia’s
own interests. Conspiracies notwithstanding, the
manifestation of nationalism in foreign policy reflects
Indonesia’s broader rational desire to preserve national
autonomy and defend it against any form of external
interference and dependence.
Foreign policy in Indonesia has also been subject to
competing domestic political forces. In 1952, for
example, opposition forces managed to bring down a
government by accusing it of deviating from the free
45
 and active principle after it signed a security treaty with
the US. As the sense of nationalism remains strong,
and domestic politics have become more competitive
in a more democratic context, taking sides or aligning
itself too closely with any extra-regional great power
carries a serious risk for the government, and becomes
a divisive issue for domestic politics.

Indonesia’s response to the growing rivalry between

the US and China can also be seen as a reflection of ‘a
sense of regional entitlement.’ Despite its formidable
domestic problems, Indonesia continues to feel that it
deserves to exercise a leading role in shaping not only
the future course of ASEAN but also the directions
of regional politics. Indonesia’s sense of entitlement
in Southeast Asia’s regional politics continues to be
reflected in its anxiety over any possible attempt by
extra-regional powers to dictate terms of regional
relations. Indonesia has always been, and still is,
committed to pushing the attainment of an ASEAN
Community as an instrument to consolidate ASEAN
in the face of external pressures stemming from
geopolitical changes in East Asia.

Indonesia, like many other regional states, sees the

growing rivalry between the US and China as a
challenge not only to its own interests but also to
the region. In that context, Indonesia’s response is
likely to continue to abide by the principle of a ‘free
and active’ foreign policy that is defined by the salient
effects of nationalism, competitive domestic politics
and a sense of regional entitlement. Consequently,
it has opted to maintain strong diplomatic ties with
both China and the US, and will continue to pursue
a strategy of hedging aimed at moderating the
potentially negative implications of the rise of China
for regional order whilst at the same time reducing
American dominance as the hegemonic power in the
region. At the same time, through ASEAN, Indonesia
also seeks to lessen the possibility of Sino-US relations
drifting into a strategic rivalry. The success or failure
of this strategy, however, will ultimately depend on
the US and China themselves. ■

46
Malaysia in the New Geopolitics
of Southeast Asia
Johan Saravanamuttu

D espite being one of the smaller states in Southeast Asia, Malaysia has been able to punch
above its weight in foreign policy, and particularly vis-à-vis the major powers in the region.
Ever since its foreign policy shifted radically from a pro-Western to a non-aligned orientation
in the early 1970s, Malaysia has been at the forefront of policy innovation in the face of the
region’s ever changing geopolitics. Some of these ideas have rubbed off on its neighbouring
states - sometimes positively, sometimes negatively. Malaysia was arguably ahead of the
curve as the first Southeast Asian state to recognise the People’s Republic of China in 1974.
This recognition came on the heels of Malaysia’s call for the “neutralisation of Southeast
Asia” and its initiative for a Zone of Peace, Freedom and Neutrality (ZOPFAN), formalised
in the 1971 Kuala Lumpur Declaration. Malaysia’s first Foreign Minister Tun Ismail Abdul
Rahman, was among the earliest proponents the idea. He was also credited with suggesting
the neutralisation scheme. The broad policy of ZOPFAN was adopted by the Association of
Southeast Asian Nations (ASEAN), of which Malaysia was a founding member, in 1967. Another
Malaysian initiative was that of ‘non-aggression’ pacts in the face of the relentless spate of
conflicts and wars in Southeast Asia throughout the 1950s and 1960s.

In terms of addressing inter-state and regional political issues, the formation of ASEAN was a most
welcome development for Malaysia. Not only did it confirm the end of the Indonesian “Confrontation”
from 1963-1965, but it also provided Malaysia with a major regional platform to initiate policies for
regional order and stability. The Malaysian government would certainly like to take some of the credit,
along with Indonesia, for the implementation of the seminal Bali accords and the inking of the Treaty of
Amity and Cooperation (TAC) in 1976 by the then six ASEAN states (Indonesia, Malaysia, Philippines,
Thailand, Singapore and Brunei). Malaysia’s approach to geopolitics in the Southeast Asian region since
the 1970s has remained a two-level approach of seeking to reduce or eliminate inter-state conflicts,
whilst instituting minimalist engagement with major powers active in the region. Malaysia’s policy of
non-alignment and its promotion of ZOPFAN has meant that it would rather not have major powers
like the US, China and Russia (in the past, the Soviet Union) having a significant political or military
presence in the region, and certainly no military alliances involving regional states. This is somewhat
different from Singapore’s approach, which is to see the major powers’ presence as a force for stability
and developing into some kind ‘balance of power’ in the region.

Recently, however, Malaysia has not been averse to having military exercises with the US, participating
for the first time in the Cobra Gold and RIMPAC exercises in 2010. Hosted by the United States, these
exercises are the largest multilateral military exercises in the Asia Pacific region and include US allies
and partners such as the UK, France, Australia, Canada, Japan, the Netherlands, Colombia, Chile, Peru,
Thailand, South Korea and Singapore. They are significant as measures to resolve some of the issues
of interoperability between the military establishments of the partnering states. China, unlike the US,
has fared poorly in conducting military exercise with Southeast Asian states. Malaysia, together with

47
 Singapore, also has had an ongoing annual military
engagement with Commonwealth states, under the
Five Power Defence Arrangements (FPDA), but while
this is a legacy of history, it continues to serve as an
important confidence building measure for military
cooperation between these two states and their
Commonwealth allies.
With regard to denuclearisation, Malaysia has
promoted and fully backed ASEAN’s Nuclear Weapon-
Free Free Zone (SEANWFZ) since its implementation
in 1995. The treaty calls for the signing of protocols
by the major nuclear powers – US, UK, China, Russia,
France – but has stalled because the United States
has demurred from participating until 2009. In 2011
Indonesia in its role as ASEAN chair indicated that it
made a technical breakthrough in negotiations. All the
major powers are now signatories to the less exacting
protocols of the TAC.
ASEAN Centrality in Malaysian
Foreign Policy
Following the Vietnam War, there was a steady decline
of US interest in the region. However, throughout the
post-Cold War years and until today, ASEAN provided
the basis for both inter-state stability and relations
with major powers. It may be for this reason that for
a time the US did not deem it necessary to provide too
much of a guiding hand in Southeast Asian affairs.
Despite its acknowledged weaknesses – such as its
cumbersome consensual decision-making procedure
and its reluctance to take positions and intervene on
internal conflicts – ASEAN has remained central to
Malaysian foreign policy.
This has been the case even in the most activist years
of Malaysian foreign policy, under the tenure of Prime
Minister Mahathir Mohamad. Mahathir’s strident anti-
Western stance and his Look East policy did not by
any means derail the centrality of ASEAN as the main
instrument of Malaysia’s regional political relationships.
Nonetheless, it was evident that Mahathir’s Look East
policy had favoured East Asian states leading to the
exclusion of the Oceania states of Australia and New
Zealand in the proposal for an East Asian Economic
Grouping (EAEG) later to be turned into the East
48
Asian Economic Caucus (EAEC) within the Asia Pacific
Economic Cooperation (APEC) formation. EAEC was
abandoned after the establishment of ASEAN-Plus-
Three in 1997, and later, the East Asian Summit (EAS)
formed in 2005 included Australia and New Zealand.
As a moderate Muslim-majority state, Malaysia certainly
places some importance in the Organisation of the
Islamic Conference (OIC) but only as a complement
to ASEAN. In the post-9/11 political climate, Malaysia
advanced the moderate face of Islam during the short-
lived tenure of Ahmad Abdullah Badawi, Malaysia’s
fifth Prime Minister and, with the encouragement
of the US and ASEAN, Malaysia established the
Southeast Asian Regional Centre for Counter-Terrorism
(SEARCCT) in July 2003. More recently, under Prime
Minister Najib Razak, Malaysia has been promoting
the Global Movement of Moderates (GMM), with
explicit US support. An international conference was
hosted by Malaysia in January 2012 in Kuala Lumpur,
which saw inclusion of 500 participants and speakers
extolling the ethos and philosophy of moderation in
dealing with global problems.
What, then, are the purported changing dynamics
of the geopolitics in the region, particularly as we
enter the second decade of the 2000s, and how
have they affected Malaysia’s foreign policy? Most
observers have stressed that the economic rise of
China and its concomitant ascendance as a global
and regional power as the crux of the geopolitical
changes in Southeast Asia. A second factor has been
the United States’ supposed loss of interest in the
region, with allies concerned about the reduction in
US defence spending while the Pentagon’s budget
is expected to shrink by USD487 billion in the next
decade. However, the Obama Administration has made
it clear that Southeast Asia, and particularly the Asia
Pacific region, remains a major priority for the US. A
particularly important gesture was his administration’s
assurance of a US “return” to Asia and its new role
as a “pivot” in the region. This was backed up by
the announcement of the rotational stationing of
2,500 US troops in Darwin, Australia, with the first
200 marines having arrived on 4 April 2012. Malaysia,
like its ASEAN partners, has been positive about a US
re-engagement in Asia, whilst being careful to balance
this with an equally cordial relationship with China
(detailed below). US engagement with Southeast Asia
has been steadily be ratcheted up until the actual first
appearance of a US president at an ASEAN Summit on
18 November 2011 in Bali, Indonesia, a development
that has been welcome by all ASEAN states.
Malaysia has made various overtures to both China
and the US over the past few years in an apparent
attempt to address the changing geopolitics. Soon
after assuming the reins of government in April 2009,
Prime Minister Najib Abdul Razak visited Beijing to
celebrate 35 years of diplomatic relations, a period
begun by Najib’s father Tun Abdul Razak. Chinese
President Hu Jintao returned the favour by visiting
Malaysia in June that same year. Malaysia is China’s
largest trading partner in Southeast Asian, with
bilateral trade in recent years surpassing $50 billion.
This fact was underlined by Chinese Premier Wen
Jiabao when he visited Malaysia and Indonesia in
April 2011. The Chinese leader signed a number
of agreements worth $ 1billion, including contracts
between China’s Huandian Engineers and Malaysia’s
Janakuasa for a coal-fired plant, an agreement
between China’s ZTE Corporation and Malaysia’s
DiGi to supply telecommunications infrastructure, and
a Memorandum of Understanding between the state
government and Beijing’s Urban Construction Group
Company to build 6.5km tunnel between Penang
Island and the mainland.
Whilst enhancing relations with China, the Malaysian
premier did not leave relations with the United
States unattended. There was a much publicised
telephone conversation with President Obama on
26 June 2009. As disclosed by official sources, the
two leaders discussed bilateral and global issues of
mutual concern, particularly those pertaining to North
Korea, Afghanistan and Iran. The newly anointed
Malaysian Prime Minister was keen to demonstrate to a
domestic as well as a regional audience his constructive
engagement with the Obama adminstration. Most
importantly, Najib Razak and Indonesian President
Susilo Bambang Yudhoyono attended the 47-nation
Nuclear Summit held in April 2010 to institute better
safeguards in the non-use and use of nuclear materials.
While the Obama-initiated event did not achieve much
that was concrete, it seemed fitting that the Summit
saw the participation of the two Southeast East Asian
states noted for their strong anti-nuclear stances.
Malaysia’s foreign policy has been in tight synchrony
with ASEAN’s approach to regional politics over the
years and in the changing geopolitics of the region
in the 2000s, this has remained so. In engaging
with the major powers in the political and economic
realms, Malaysia has deemed it fit to act through
ASEAN instrumentalities or forums such as the ASEAN
Regional Forum (ARF), the ASEAN-Plus-Three, East
Asia Summit (EAS) and more recently, the ASEAN
Defence Ministerial Meeting Plus (ADMM Plus). These
forums have allowed Malaysia and its ASEAN partners
to enhance confidence building on security issues
and build upon East Asian solidarity and economic
cooperation. The 27-member ARF allows for the
maximum play and airing of regional security issues
while the ASEAN +3 and EAS are more focused
on East Asian economic collaboration. ASEAN has
touted the establishment in 2010 of the ADMM- Plus,
which includes all its Dialogue Partners, as a move
of effective regional cooperation for disaster relief,
counter-terrorism, maritime security, peacekeeping,
and military medicine.
Geopolitics of the South China Sea
Some of the most difficult issues in the region concern
developments with respect to the South China Sea
(SCS). Two sets of players are involved in these
dynamics: the claimants to its territories, islands and
features; and the outside powers and states that have
an interest in maintaining sea lines of communications
and freedom of navigation.
Malaysia is a major claimant in the SCS, along with
China, Vietnam, the Philippines, Brunei and Taiwan.
ASEAN as a group has attempted to engage with China
through the 2002 Declaration on the Conduct of Parties
in the South China Sea (DOC), which underscores
universally recognised norms of international law
based on the 1982 United National Convention on
the Law of the Sea (UNCLOS). Not much progress has
been made in resolving issues between the ASEAN
49
 nations and China despite the setting up of a Joint
Working Group that has held several meetings to date.
The matter is further compounded by the vagueness
of China’s claims and the US insistence, although not
as a claimant, to freedom of navigation in the South
China Sea, on which China has remained silent. The
annual value of US trade passing through the SCS is
said to exceed $1trillion and political analysts suggest
that the US is increasingly concerned about China’s
recent assertiveness in the region. China’s interest in
the SCS is to be expected, given that it is, after all, the
major littoral state to these waters. China’s extravagant
claims are based on its controversial U-shaped map
drawn in 1947 extending to territories claimed by
Malaysia and Brunei at its southern-most end. But
what is particularly worrisome is the character of
its claims, which remain rather vague, given that
the nine dashed lines of its map at the southern
extremity has never been explained in the lexicon of
international law.
Figure 1: China’s U-Shaped Claims in the South China Sea
50
For its part, Malaysia has occupied a number of reefs
and atolls, and stakes its claims based on its 1979 map,
which extends its continental shelf along the Sabah
and Sarawak coast into the Spratlys and Kalayaan
area. To date, Malaysia has occupied eight features. In
June 1983, Malaysia occupied Swallow Reef (Terumbu
Layang Layang), which was subsequently turned into
a tourist resort for bird watching and diving, complete
with an airstrip. The Royal Malaysian Navy protects
the islands with its vessels, anti aircraft guns and
other military facilities. The Malaysian posture has
drawn protest not just from the Philippines but also
from Beijing and Hanoi. On occupying Swallow Reef,
Malaysia deployed three F-5 fighters to Labuan to
provide military backing to its claims. In 2004 Malaysia
completed the Teluk Sepanggar naval base, which will
house its two Scorpene-class submarines, the first of
which, the KD Tunku Abdul Rahman docked into port
in September 2009 while the second, KD Tun Razak
arrived in July 2010.
Malaysia’s territorial claims in adjoining seas have
resulted in serious encounters and minor military
clashes with its neighbours. In recent years, since
2005, there have been naval clashes with Indonesia
over overlapping claims in the “Ambalat” area of the
Celebes Sea claimed by both countries. Malaysia has
maintained consistent cooperation with Brunei, with
a major agreement signed in 2009, while its most
acrimonious relations in the past have been with the
Philippines, which still has not formally withdrawn its
claim to the Malaysian state of Sabah. The signing in
2006 of an agreement between PETRONAS, Malaysia’s
national oil and gas corporation, with China’s Shanghai
LNG company has interesting implications for Malaysia-
China SCS relations and suggests that cooperation
rather than confrontation could be the order of the
day for the two claimants. To date, China has not
entered into any joint development with Southeast
Asian states in the South China Sea.
More recently, on May 6th, 2009, Malaysia-Vietnamese
cooperation has taken the form of a submission to
the Commission on the Limits of the Continental
Shelf (UNCLOS) notifying the two countries’ extended
continental shelf claims in the SCS. The area covered
was within the 200 nautical mile limit of the two
countries and included part of the Spratly Islands
and its adjacent waters. Malaysian Prime Minister
Najib Razak said both countries had “more or
less” sorted out the portions each country owned.
Figure 2: Malaysia-Brunei Commercial Arrangement Area
The very next day, on May 7th, China filed a note with
the UN Secretary-General objecting that the area
claimed was under Chinese sovereignty. Malaysia
responded with a note asserting its legal right to
claim the area and stating that it recognised the
overlapping claims by various countries over the same
territory. During his state visit to China in June, Razak
intimated that China and Malaysia had reached an
understanding and agreed to continue negotiations
over all territorial disputes.
It is obvious, however, that the Malaysia-Vietnam joint
submission would be problematic simply because of the
multiple claimants to the SCS entities and, in particular,
China’s expansive U-shaped claim. The Philippines
may have recently clarified matters for themselves
by resorting strictly to an islands regime approach.
However, the overall problem of multiple claimants also
explains why the Joint Development Areas (JDAs) have
been slow to take shape. Malaysia now has one major
JDA with Brunei, which was agreed in 2009. According
to Wisma Putra, Malaysia’s Ministry of Foreign Affairs,
the talks leading to the signing of the agreement
represented the culmination of 20 years of tough
negotiations. The two sides agreed to ‘unsuspendable
rights of maritime access’, which guaranteed the
right of movement by Malaysian vessels through
Brunei territorial waters, provided Brunei’s laws and
regulations are observed. The Malaysian statement
maintained that the settlement was premised on
51
 UNCLOS principles, but it would appear that Malaysia
has given up sovereignty claims to the Brunei Blocks
of J and K in return for the establishment of a 40-
year joint Commercial Arrangement Area (CAA) for
purpose the exploiting of oil and gas. This development
seemingly represents a new modality in the practice of
JDAs. In the past, JDAs remained as disputed territories,
with parties involved not agreeing to any finality
of sovereign claims. In effect, Malaysia and Brunei
may have taken the level of cooperation on disputed
territories in the SCS to a new level but there remain
elements of the bargain to which the public is not privy.
CONCLUSION
Every era creates new parameters for political actors
in international relations. Malaysia, as a small state,
sometimes aspiring to be a ‘middle power’, has been
able to adapt its foreign orientations and policies over
the years. In the mid 1970s, its leaders devised policies
consistent with a non-alignment posture. Yet with
the formation of ASEAN and its growing influence,
Malaysia was able to fashion relationships, together
with other regional states, to bring about a high
level of peace and stability in Southeast Asia whilst
maintaining stable relations with outside powers.
ASEAN and its various instrumentalities are likely
to remain as the basis on which Malaysia seeks to
address the new dynamics of relationships in the
region, and in particular the role of the US in the
face of a more political assertive China. Under the
Obama Administration, the US has returned with a
new sense of mission to balance China’s enhanced
influence and presence in the region. Moreover, the
changing politics of Southeast Asia itself, such as the
political developments in Myanmar and the problems
arising from the South China Sea, have conspired to
re-engage the US in Southeast Asia.
Malaysia has remained an active player in the region
by continuing to act to enhance ASEAN’s norms,
policies and preferences in maintaining Southeast Asia
as a zone somewhat autonomous of major power
dominance, but with a measure of engagement. The
idea of a Nuclear-Weapon Free Zone for Southeast
Asia (SEANWFZ), has been something which Malaysia
has always supported, and remains as one modality
of maintaining an equidistant relationship with the
major powers. In 2012 Malaysia hosted the inaugural
conference of the US-inspired Global Movement for
the Moderates in Kuala Lumpur, but such vague
groupings are unlikely to replace the more time-
tested ASEAN.
Malaysia, like most of its fellow ASEAN states, is
certainly committed to the three pillars of regional
community building, namely, a political-security
community, an economic community and a socio-
cultural community. However, most of these goals
remain amorphous and will most certainly not be
achieved in the short or medium term. While it could
be argued that ASEAN has become a pluralistic security
community, most observers do not believe that ASEAN
could become a fully-fledged economic community
by 2015. This said, ASEAN remains the bedrock for
regional relationships and Southeast Asia’s own ‘pivot’
for its relationships with outside actors and powers. ■

The challenge for states like Malaysia in the face the

changing political economy of the region, is whether it
will hitch its wagon to an emerging China-linked East
Asian economic integration or the larger Trans-Pacific
Partnership (TPP) led by the United States. Malaysia,
while having just joined the TPP, is unlikely to abandon
East Asian integration in the long run.

52
Myanmar: Now a Site for
Sino–US Geopolitical Competition?
Jürgen Haacke

A fter the suppression of political protests in 1988, the Unites States’ Burma policy was
primarily focused on the restoration of democracy and support for Daw Aung San Suu
Kyi and the National League for Democracy (NLD). The strong anti-regime thrust of this policy
meant that until 2011, when the ruling military junta, the State Peace and Development
Council (SPDC; previously known as the State Law and Order Restoration Council, or SLORC)
handed over power to a nominally civilian government, Washington consistently ostracised
Myanmar in international society. Moreover, the US systematically applied unilateral, broad-
based sanctions, and persistently called for a genuine dialogue with the political opposition
that would ultimately lead to a transfer of power. Very much influenced and buttressed by
a network of exiled Burmese dissidents and solidarity organisations, various human rights
and pro-democracy groups, as well as overwhelming support in both houses of Congress, US
policy nevertheless failed to force Myanmar’s leadership to compromise, let alone abandon
their own political roadmap, as initiated in 2003. In the face of considerable US pressure,
Naypyidaw relied above all on China for diplomatic protection at the UN Security Council, as
well as financial assistance and expertise for limited economic development.

In 2009, the incoming Obama administration initiated a comprehensive policy review of US Burma
policy that led to the adoption of a more pragmatic, yet still ‘principled’ policy of engagement vis-à-vis
Naypyidaw. The principal policy change concerned the adoption of a senior-level dialogue alongside existing
sanctions. For almost two years though the policy shift failed to produce major results, notwithstanding
Daw Aung San Suu Kyi’s release from house arrest during this time. However, within months of former
Prime Minister U Thein Sein becoming the first President under the 2008 Constitution in late March
2011, the careful rapprochement between Washington and Naypyidaw, started two years earlier, soon
paved the way for warmer bilateral relations. This happened when, from mid-2011 onwards, the new
nominally civilian government opted to embark on a process of national reconciliation that in many ways
satisfied American demands and hopes for such a process.

Interestingly, at a time when US policy toward Southeast Asia is widely seen to be underpinned by
concerns regarding the People’s Republic of China, the Obama administration suggested that its more
pragmatic policy toward Myanmar was fundamentally about supporting democracy and human rights
as well as stability and greater prosperity in Burma, rather than being about China. As Secretary of State
Hillary Clinton put it:

‘... we are not about opposing any other country; we’re about supporting this country [Myanmar]…
as I specifically told the president and the two speakers, we welcome positive, constructive
relations between China and her neighbours…So from our perspective, we are not viewing this
in light of any competition with China.’1

1 Hillary Rodham Clinton, Press Availability in Nay Pyi Taw, 1 December 2011, www.state.gov/secretary/rm/2011/12/177994.htm

53
 While taking seriously the declaratory objectives of US Burma policy, this short paper will examine in what
ways Myanmar nevertheless is already becoming a potentially significant site for Sino-US geopolitical
competition in Southeast Asia. It will do this in three steps. First, it will assess whether it is plausible that the
declared goals fully capture the rationale underpinning US Burma policy, given its broader regional policy and
strategy. Second, the paper will briefly explore China’s ambitions in Myanmar, as well as Beijing’s reaction to
Washington’s efforts to normalise and deepen relations with Naypyidaw. Finally, the paper discusses both
in what ways Naypyidaw’s rapprochement with Washington fits the historical pattern of Myanmar foreign
policy, and what this means for Myanmar’s management of Sino-US competition.

THE OBJECTIVES OF THE OBAMA ADMINISTRATION’S BURMA POLICY

The democratisation of Myanmar has constituted an important US policy objective for all recent U.S
administrations. However, the embrace of pragmatic engagement in 2009 was an acknowledgement by the
Obama administration that relying solely on sanctions in pursuit of political reforms and change in Myanmar
made for a poor and failed strategy, and that better foreign policy instruments were available to the US
to achieve this goal. Under Obama, dialogue thus became an important complement to sanctions. State
Department officials in particular have played an important role both in the lead up to and since the initiation
of the political process involving the new Myanmar government and Aung San Suu Kyi. These officials have
communicated to Naypyidaw US expectations of the necessary steps and reform measures to advance the
bilateral relationship. They have also closely interacted with Suu Kyi regarding political developments and her
possible options in the context of political transition and the generational change at the top of Myanmar’s
(ex)-military leadership. US officials as such also seem to have played a key part in Suu Kyi’s reassessment of
how to approach those former military leaders now at the helm of the new civilian government. Similarly,
US officials have discussed both with the government and ethnic groups the issue of national reconciliation.

Beyond the goal of promoting political freedoms and democratic governance in Myanmar, the adoption of
a more pragmatic Burma policy also served other objectives. One was the strengthening of US relations with
ASEAN. Although the George W. Bush administration had not overlooked Southeast Asia, Washington was
soon primarily preoccupied with operations in Iraq and Afghanistan to the perceived detriment of its ASEAN
ties. Bush’s critics within the US had pointed to significant long-term policy drift that put at risk American
economic, political and security interests, and called for a comprehensive ASEAN strategy that recognised both
Southeast Asia’s interest in global free trade and its important role in structuring regional security dialogues.
The Obama policy team had also appreciated that President Bush’s hard-edged Burma policy had to some
degree complicated relations with the Association as a whole because Washington had applied pressure on
ASEAN countries to advance political change in Myanmar. Though promoting such change was to some extent
shared by regional countries, ASEAN governments generally thought that a policy focused on sanctions and
ostracism was counterproductive. They preferred economic and diplomatic engagement. Worrying though
from a Southeast Asia perspective was that Washington seemed prepared to hold the further development
of ties with ASEAN hostage to the situation in Myanmar. Such perceptions and assessments, not least those
from within ASEAN, required a response. The review of US Burma policy and Washington’s decision to embark
on a more pragmatic approach can thus be seen as part of an attempt not only to be effective in bilateral
relations with Myanmar, but also to refashion US ties with ASEAN. When the policy adaption was announced,
ASEAN countries welcomed it.

54
The Obama administration’s focus on strengthening ties with ASEAN as an organisation, as well as with its
member-states cannot, however, really be considered outside the context of China’s rise as a great power
and its deepening ties with Southeast Asia. China’s relations with the ASEAN states had greatly improved on
the back of the China-ASEAN free-trade agreement and Beijing’s offer of Chinese aid, especially to countries
in continental Southeast Asia, not least Myanmar.2 It seemed that even countries such as the Philippines and
Indonesia were susceptible to China’s charm offensive and associated economic carrots. When the East Asia
Summit, organised and nominally led by ASEAN, held its inaugural leaders’ meeting in 2005, Washington
was excluded, much to its concern.

To be sure, the United States has for some time generally welcomed China’s growing stature and weight.
However, Washington has also been concerned about China’s growing military capabilities and it has sought
to influence China’s foreign policy choices by shaping the latter’s regional environment, not least by revitalising
relations with alliance partners and friendly states. The Bush administration suggested in 2005 that China
should become a ‘responsible stakeholder’ in regional and international society, while simultaneously hedging
against the possibility that Beijing would not. The Obama administration advanced a similar official position
vis-a-vis China by emphasising the need for ‘strategic reassurance’, while continuing a dual strategy of
engagement and balancing.3

The Obama administration has not only been prepared to counter and offset China’s earlier charm offensive in
Southeast Asia, but also to confront, for instance, what has been perceived as renewed Chinese assertiveness
in the South China Sea. This has involved emphasising the importance of the freedom of navigation and
diplomatically challenging Beijing regarding its actions and claims in the South China Sea. In November 2011,
for instance, Hillary Clinton made clear that while Washington did not take a position on any territorial claim,
the claimants should not resort to intimidation or coercion to pursue the latter.4 That month, the United States
also announced the deployment of a rotating contingent of 2,500 troops to Darwin, Australia.

Notably, the Obama administration continues to argue that it wants a ‘strong progressive partnership’ with Beijing,
while asserting that the US is ‘destined to play a strong critical, primary role in the Asia Pacific region for decades to
come’.5 To secure America’s leadership role in the Asia-Pacific, the administration has identified six lines of action:

1. Strengthening bilateral security alliances;

2. Deepening US working relationships with emerging powers;
3. Engaging with regional multilateral institutions;
4. Expanding trade and investment;
5. Forging a broad-based military presence;
6. Advancing democracy and human rights.

These lines of action all form part of what has been referred to as Obama’s ‘pivot’ towards the Asia-Pacific.
In substantive terms, this involves, for instance, promoting the Trans-Pacific Partnership and joining the East
Asia Summit. However, what Hillary Clinton called ‘forward-deployed diplomacy’ aims to make use of the
full range of US diplomatic resources to ‘every country and corner of the region’.6 These diplomatic efforts
to advance the security and prosperity of the region are underpinned by the US military’s ‘rebalancing’

2 See Bronson Percival, The Dragon Looks South: China and Southeast Asia in the New Century (Westport, CONN: Praeger Security International, 2007),
Robert G.Sutter, China’s Rise in Asia: Promises and Perils (Lanham, MD: Rowman & Littlefield, 2005).
3 As Deputy Secretary of State James Steinberg put it in October 2009, ‘China must reassure the rest of the world that its development and growing global
role will not come at the expense of the security and well-being of others.’
4 Paul Eckert and Manuel Mogato, ‘Clinton warns against intimidation in South China Sea’, Reuters, 16 November 2011, www.reuters.com/article/2011/11/16/
us-philippines-clinton-idUSTRE7AF0JZ20111116
5 Kurt M. Campbell, ‘US Engagement in Asia’, Remarks at the Institute of Security and International Studies, Chulalongkorn University, Bangkok, 10 October
2011.
6 Hillary Rodham Clinton, ‘America’s Pacific Century’, Remarks at the East-West Center, Honolulu, 10 November 2011.

55
 towards the region.7 Put differently, the US military is tasked to back principles of open and free commerce, the rule
of law, open access by all to their shared domains of sea, air, space, and cyberspace, and resolving disputes
without coercion or the use of force. To achieve this task Secretary of Defense Leon Panetta has announced
‘a sustained series of investments and strategic decisions to strengthen our military capabilities in the Asia
Pacific region’.8

Obama administration officials may insist that their goal is to improve ‘strategic trust’ between China and
the United States. However, it is difficult to conclude that there is not a significant lack of trust that is very
difficult for both sides to overcome. Chinese analysts increasingly see Washington moving beyond strategic
ambiguity to embracing a containment strategy.9

Given this broader context of US-China relations, the United States’ new Burma policy remains geared to
the promotion of democratic governance and national reconciliation, but under President Obama it has
arguably from the start also been made with China very much in mind. Statements regarding Myanmar
initially made by administration officials may not always fully acknowledge this, given the significant and
longstanding bipartisan support for regime change in Burma. However, the larger strategy outlined by the
Obama administration supports this assessment. Also, it is useful to recall, for instance, that Assistant Secretary
of State Kurt Campbell, who has been personally very much involved in leading the shift in Washington’s
approach toward Myanmar, not only focused extensively on China’s rise and the balance of power in Asia
before joining the administration, but has also been at the very heart of recalibrating US strategy toward
the region. Similarly Ambassador Derek Mitchell, who in 2011 became the special representative and policy
coordinator for Burma and then took up the long vacant post of US ambassador to Burma, may have had a
longstanding interest in Myanmar, but he also remains known for his very significant expertise and contributions
on developing strategy toward Southeast Asia and the wider East Asia-Pacific.

CHINA’S MYANMAR POLICY

In the context of Deng Xiaoping’s twin policies of reform and opening up to the outside world, Chinese
policy advisors were emphasising the significance of Myanmar’s geographical position by the early to mid-
1980s. However, it was not until the beginning of this century that major infrastructure projects, such as
the future oil and gas pipelines traversing Myanmar, were agreed. Today, Chinese SOEs are heavily invested
in Myanmar’s natural resource sector. Politically, China’s government continues to celebrate its longstanding
‘paukphaw’ (kinship) relationship with Myanmar that was first formed in the 1950s, while Chinese leaders
have generally appreciated the entrenched sense of nationalism among Myanmar’s military leadership and
its preference for foreign policy diversification.

Anecdotal evidence suggests that Chinese analysts working on Southeast Asia and Myanmar thus immediately
understood that the 2009 US Burma policy review alone might be understood in Naypyidaw as an opportunity
to open up new diplomatic space for decision-makers. China’s government actually welcomed the Obama
administration’s pragmatic engagement policy; earlier, China had itself facilitated an unsuccessful dialogue
meeting between Myanmar and US officials in 2007. However, more recent developments, not least the US’
role in Myanmar’s dramatic embrace of political and economic reforms, and the Thein Sein government’s rapidly
improving ties with the Obama administration, would seem to have left Beijing both startled and concerned.

7 See US Department of Defense, Sustaining US Global Leadership: Priorities for 21st Century Defense, January 2012.
8 Leon Panetta, ‘The US Rebalance Towards the Asia-Pacific’, 11th IISS Asian Security Summit (Shangri-La Dialogue), 2 June 2012.
9 Lanxian Xiang, ‘China and the ‘Pivot’, Survival 54 (5) 2012, p.117.

56
During the decades in which various US administrations sought to break the military regime’s political will,
China had emerged as Myanmar’s largest foreign investor, a key trading partner, and a very significant
source of finance and expertise. The outcome of the US Burma policy review in September 2009 did not
immediately threaten to alter the contours of this structural position, just as it did not immediately engender
a fundamentally different relationship between Naypyidaw and Washington. Arguably, Chinese decision-
makers were content to see that while the SPDC was in power the new US Burma policy had little effect on
either Myanmar’s relations with Washington or the domestic politics of Myanmar itself.

China’s government apparently expected this state of affairs to continue even after the transition in late
March 2011 to a nominally civilian government, despite Suu Kyi’s release the previous November and ongoing
international clamour for political change. Indeed, the overwhelming victory of the USDP in the problematic and
much criticised 2010 elections followed by the transfer of power to a younger generation of former military
leaders, which saw long-serving Prime Minister Thein Sein become Myanmar’s new President, seem to have
led China’s government to initially believe that the new government in Naypyidaw would not significantly
deviate from longstanding SPDC positions, not least on national reconciliation and political reforms. With an
elected and hence arguably more legitimate government in place, China itself pushed for a comprehensive
strategic cooperative partnership, which was formally agreed during U Thein Sein’s first visit as President to
Beijing in May 2011.

From Beijing’s perspective, such a partnership would build on and reinforce its existing economic and political
relationship with Naypyidaw. In 2006-7 China provided Naypyidaw with important diplomatic protection, as
Washington and London claimed that Myanmar posed a threat to regional peace and stability. This culminated
in the China-Russia double veto in January 2007 of a draft resolution introduced by Washington and London
at the UN Security Council. China itself became subject to considerable US diplomatic pressure following the
veto. Yet rather than acquiesce to American calls for sanctions or add to international pressure for regime
change, Beijing went no further than favouring an acceleration of the military’s own political roadmap to
democracy. This support for the military government reflected China’s abiding interest in Myanmar’s political
stability. There were also specific interests, both for Yunnan – China’s southern province that borders Myanmar
– and Beijing, including border security, the safety of Chinese investments, and the construction and future
operation of dual gas and oil pipelines from the Bay of Bengal to Yunnan.

Moreover, at one level, China’s push for a comprehensive strategic partnership was not that remarkable because
Beijing had already agreed similar partnerships with numerous other countries both within Southeast Asia and
beyond. However, active bilateral diplomacy conducted in this context revealed a significant interest among
Chinese political and military leaders in expanding the limited military cooperation that has characterised
Sino-Myanmar relations to date. China’s desire for greater military cooperation seemingly was rooted in its
strategic interest in access to the Bay of Bengal, in the context of Beijing’s apparent longer-term objective to
develop a naval presence in the Indian Ocean. A plan of action to implement the partnership was endorsed
by foreign ministers Jian Jiechi and U Wunna Maung Lwin in July 2011. What specific new forms of military
cooperation, if any, have been agreed is not clear.

Indeed, following President U Thein Sein’s visit to Beijing in May 2011, Chinese decision-makers soon enough
found bilateral ties exposed to new political currents within Myanmar as President U Thein Sein suspended the
massive Myitsone hydropower project in Kachin State in late September, which the China Power Investment
Corporation had been constructing since late 2009. This decision was ostensibly taken in response to
widespread domestic opposition reportedly also supported by Aung San Suu Kyi. In Western countries the
suspension was mostly understood as a symbolic move against overbearing Chinese influence. For Beijing the

57
 decision arguably raised questions about its relations
with Myanmar more generally and the implications
for this and other Chinese investments in Myanmar
more specifically.
The pace of improvements in US-Myanmar relations
since August 2011 has exceeded most expectations,
and both Washington and Naypyidaw were moved to
reassure Chinese officials when Secretary Clinton visited
Myanmar in December that year. Since then, however,
US-Myanmar ties have continued on their upward
trajectory as highlighted by President U Thein Sein’s
visit to the US in September 2012.
The Chinese government may voice understanding
for Myanmar’s efforts to diversify its international
partners, but nevertheless will find any move
towards possible alignment between Washington
and Naypyidaw difficult to accept in practice. Yet over
time limited alignment is likely to be sought by the
United States; certainly the Obama administration’s
aim is for Washington to forge a better relationship
with Myanmar than it currently enjoys with Vietnam.
Many in China thus see the change in US Burma
policy as part of a larger effort to encircle and contain
China. From Beijing’s point of view, the changes in
bilateral relations to date probably already imply that
the scope of China’s future cooperative relationship
with Myanmar could be more limited than previously
expected: political-military cooperation represents the
area most likely affected, but normalised relations
with Washington will of course also allow Myanmar
to seek alternative sources of capital and expertise
from international financial institutions, Japan and
Western countries.
With America keen to deepen its warming ties with
Myanmar, China’s government has openly stated its
expectations pertaining to Naypyidaw’s future foreign
policy orientation. For instance, in talks with former
Vice President U Tin Aung Myint Oo, State Councillor
Dai Bingguo declared China’s interest in a ‘peaceful,
stable, independent and prosperous Myanmar’.
Chinese leaders have also called for strengthening
strategic trust between the two countries, as well as
improved coordination and cooperation. Some have
even proposed the consolidation of ties between the
Communist Party of China and Myanmar’s Union
Solidarity and Development Party.
58
Beyond such rhetoric, China has also sought to take
concrete steps to rebuild confidence and reinforce
its relations with Naypyidaw. For instance, Chinese
interlocutors have continued to facilitate dialogue
between the government and some armed ethnic
groups. China’s recent response to Kachin refugees
seeking refuge along and across its border was also
more measured than some might have expected
given its previous reaction to the military and political
decapitation of former Kokang leader Peng Jiasheng
in 2009. Not surprisingly, China’s government has
unambiguously voiced support for Myanmar’s
economic reforms and development goals. When
the United States and Europe were debating how
and when to dismantle sanctions imposed against the
SPDC, Beijing pointedly reiterated its call on Western
countries to lift sanctions to promote stability and
development in Myanmar. Also around this time,
in New York, Beijing proposed that the Myanmar
‘Group of Friends’ at the UN assume a more practical
role to bolster the country’s economic development.
These positions and initiatives suggest that PRC
decision-makers are loathe to cede political ground
to Washington,, attesting to a competitive dynamic at
play. How is this competition likely to affect Myanmar’s
foreign policy?
Myanmar Foreign Policy
Historically, Myanmar’s political leaders have pursued
a nonaligned foreign policy to manage the complex
mix of external and internal political-security pressures
that the country has confronted since independence.
Despite this nonalignment, China has always had a
special place in Myanmar foreign policy, which to
some extent has found expression in emphasis on the
kinship or ‘paukphaw’ character of their relationship,
and the Five Principles of Peaceful Coexistence. While
China presented a multifaceted challenge for Burma
during the SLORC/SPDC years, Naypyidaw was able
to rely on the People’s Republic for diplomatic support
and protection, especially when the United States
sought to exert concerted multilateral pressure at the
UNSC. Yet even during this period, however, Myanmar
formally pursued a nonaligned foreign policy, and at
most entertained with Beijing what might be called
limited alignment in practice.
While taking advantage of Beijing’s diplomatic cover, the increasing economic dependence on China in
the face of Western sanctions was becoming a major concern for Myanmar’s nationalist military leaders.
Veteran Burma analyst Bertil Lintner has repeatedly stressed that an internal study of Myanmar-US relations
calling for improvements in bilateral relations to alleviate the potential costs of Myanmar’s reliance
on China conducted by Naypyidaw as early as 2004.10 In the event, the top military leadership clearly found it
difficult to balance ties with China by building a better relationship with the United States for as long as the
George W. Bush administration was in power, although the SPDC’s interest in a dialogue with Washington
was communicated both before and after the completion of its political roadmap in September 2007. Only
with the Obama administration undertaking a review of Burma policy did a promising opportunity for a
constructive new relationship with the US emerge.

Warmer ties with the United States are bound to yield many positives. American investments in Myanmar
are now again possible, which should contribute at minimum to the creation of some new jobs; important
in this regard is also the opportunity for Myanmar-based producers to export again to the US. Moreover,
Myanmar’s evolving relationship with Washington is bound to result in the renewal of educational and
institutional capacities, as well as social capital. Bilateral and wider international assistance to deal with urgent
humanitarian and development issues within the country will also become available. This, in turn, should
make it more likely, for instance, for the Thein Sein government to successfully address not least the complex
emergency that has characterised the country for long.

The new relationship with Washington has not only served to help legitimise the incumbent government,
but also allowed Myanmar leaders to cast aside representations of the country as a pariah state in regional
and international society. It has also made possible the wider rebalancing of Myanmar’s external relations.
Countries that were erstwhile persuaded or pressured by Washington to play hardball with the military
government have been able to reconsider their position toward Naypyidaw. Quite striking, for instance, is
Japan’s planned level of future economic engagement, which would have been impossible during SPDC rule,
but which the Thein Sein government has successfully encouraged. Meanwhile, Myanmar’s fellow members
in ASEAN are keen for Naypyidaw to reinforce Southeast Asian regionalism, whereas before Myanmar was
collectively criticised and at times isolated. Clearly, Myanmar sees ASEAN as having a very important political
function, underlined by its application to assume the Association’s chairmanship in 2014. Regarding new
avenues of military cooperation, Myanmar seems destined to attend as an observer the forthcoming Cobra
Gold exercise, the largest multilateral exercise the United States conducts in the Asia-Pacific region. Organised
in Thailand on an annual basis, Cobra Gold involves several other participating countries from Southeast and
East Asia, such as Indonesia, Malaysia, Singapore, South Korea and Japan.

Notwithstanding these developments, it is difficult to envisage Myanmar breaking anytime soon with a
key pillar of its foreign policy, namely the principle of nonalignment. The rebalancing of Myanmar’s foreign
relationships to date seems entirely compatible with contemporary practices of nonalignment. The reform
policies enacted hence are unlikely to mean that China will no longer have a special place in Myanmar
diplomacy. After all, China is an established cooperative partner and a direct neighbour. Burning bridges with
China is thus not in Naypyidaw’s interest.

10 See, for instance, Bertil Lintner, ‘Realpolitik and the Myanmar Spring’, Foreign Policy, 30 November 2011, www.foreignpolicy.com/articles/2011/11/30/
democracy_myanmar [accessed 2 December 2011]. The study was authored by Lt Col Aung Kyaw Hla at the Myanmar Defense Services Academy.

59
 Also, it seems likely that at least the government of President U Thein Sein will not want to be too beholden
to Washington, just as it does not want to be too beholden to Beijing. Indeed, the opening to America is
not devoid of its own challenges. The odd piece of anecdotal evidence suggests that some of Myanmar’s
officials feel that Washington is pushing rather hard even at this stage for new forms of bilateral cooperation.
What remains to be seen is whether long-held memories and suspicions of the United States have already
dissipated across the political and military leadership.

So far, warmer ties with the US have hinged on President Thein Sein following through not only with the
necessary steps and concessions that have allowed Daw Aung San Suu Kyi to rejoin and legitimise the political
process started under the SLORC/SPDC, but also a series of other important steps, such as the release from
prison of critics of the former military regime. Given the results of the 2012 by-elections, in which the NLD
thrashed all other political parties, there remain questions about the political future of those who won office
on the back of the problematic 2010 elections. It is also far from clear whether the constitutional changes to
which Daw Suu Kyi aspires will be achievable before the 2015 elections. While the Obama administration has
offered backing to President U Thein Sein’s government in support of his willingness to engage in reforms,
American policy makers are bound to watch closely how Myanmar’s former generals will manage the process
of political change over the next few years.

CONCLUSION

As the Obama administration is keen to support Thein Sein’s dual project of political reconciliation and
economic reforms, with China’s rise clearly in mind, the geopolitical competition over Myanmar between
Washington and Beijing is set to intensify. The present US role in Myanmar’s political and economic reforms
will in all likelihood lead in the future to a greatly expanded presence in the country. By comparison, China’s
often much exaggerated political hold over Naypyidaw has taken a knock with US-Myanmar rapprochement.
Its significant economic presence in Myanmar will continue, however. Significantly, far from pulling back, the
Chinese leadership also seems eager to continue to boost the bilateral relationship with Naypyidaw, which
will probably prompt more rounds of competition for greater influence between Beijing and Washington
concerning Myanmar.

By normalising relations with Washington, Naypyidaw will have gone some way to restoring the balance
historically favoured in Myanmar’s external relations. To progress with its domestic reform agenda, the Thein
Sein government seems committed both to warmer relations with Washington as well as pursuing the
comprehensive strategic cooperative partnership it agreed with China. However, evidence suggests that the
Thein Sein government knows it will need to carefully manage the attention and interest from both Beijing
and Washington.

Finally, one should not assume that developments in Myanmar over the next three years will necessarily
amount to an entirely smooth political transition. So far the NLD has been the major beneficiary in party
political terms from the present process of reconciliation long urged by Washington. With the political future
of representatives and officials of the previous regime possibly in doubt, there is at least the question over
how much internal pressure the President will yet face and be able to resist regarding a possible recalibration
of the current political course and concessions in the name of national reconciliation. In turn, the resulting
decisions of this process are likely to affect Nypyidaw’s relationship with Washington and Beijing. ■

60
The Philippines
Emmanuel Yujuico

T he Philippines is no stranger to geopolitics. It stood near the frontier of ideological struggles

as the Cold War raged in the Asia-Pacific. Not only did American bases in the Philippines
figure in the Korea and Vietnam conflicts, but the Philippine Expeditionary Force to Korea
(PEFTOK) also fought on behalf of the United States against North Korean and Chinese forces.
In the post-Cold War era, however, the Philippines finds itself in a changed world. In 1991, the
United States left Clark Air Force Base and Subic Naval Base as the communist threat to the
region receded. Few probably suspected then that the Philippines would have to reckon with
another rising, ostensibly communist power, in a few years’ time.

Alike practically all other countries and regions, the Philippines has had to consider the relative rise
of China amidst American decline. However, its foreign policy interests are contextually shaped by
its American colonial legacy and enduring ties with the United States on one hand, and its historical
influences from and geographical proximity to China on the other. Another layer of complexity is added
by the Philippines being part of the Association of Southeast Asian Nations (ASEAN), in which fellow
member nations have their own ideas about their collective role in responding to Sino-American tussles
over regional hegemony.

This contribution will review the sociohistorical, military and economic factors that shape Philippine foreign
policy towards China and the United States. When these factors are considered, it remains evident that
the United States retains an advantage over China in having closer relations with the Philippines. That
said, the United States would be mistaken to think that it has implicit backing whenever the Philippines
must choose between rewarding Chinese or American interests. That said, the Chinese may yet discover
that influence over the Philippines’ external relations also has its price. Sociohistorical, military and
economic advantages that either China or the United States holds in its dealings with the Philippines are
not fungible or readily transferrable into advantages in other realms, since cultural, military and economic
actors differ, while Philippine public opinion tends to fixate on current events.

SOCIOHISTORICAL ASPECTS

If the contest between China and the US for Filipino affections solely concerned cultural affinity, then the
United States would have a convincing advantage. Despite its American period of colonisation being far
shorter than its Spanish one, the Philippines’ ties with the United States are deeper and more extensive.
While Chinese interactions with residents of the Philippine islands date back to a far earlier time, China
itself has largely been unable to translate sociohistorical linkages into ‘soft power’ that it can leverage.

As Michael Cox argues elsewhere in this report, part of the United States’ lasting appeal lies in foreigners
being able to see themselves as emigrants living some variant of the American Dream. Nowhere is this
intuition more evident than with Filipinos, who have been among its most avid consumers. Despite the
Philippines’ population being less than a tenth of China’s, Filipino-Americans lag behind only Chinese-
Americans as the second largest Asian minority in the United States. With Philippine education and medical

61
 systems modelled on those of the US, Filipinos fluent in
English have readily assimilated into American society,
reaching native standards of living when windows of
opportunity have opened.
Filipino entertainment is also heavily influenced by
Filipino successes breaking into the mainstream of
American pop culture. Arnel Pineda from Olongapo
City near Subic Bay became an overnight sensation
when Neal Schon of the San Francisco-based band
Journey made Pineda their new lead singer after
watching him perform on YouTube. Similarly, Charice
Pempengco gained global fame by appearing on the
hit TV show Glee playing an exchange student. Boxer-
turned-congressman Manny Pacquiao has earned
most of his fame in Las Vegas bouts, even boasting
that he helped Democratic Senator Harry Reid win re-
election in 2008 by asking Filipino-American Nevadans
to vote for Reid. Hence, a colonial mentality remains
evident in how Filipinos view ‘making it big’ as doing
well in America.
Vocal but minority voices aside, it comes as no surprise
that Filipinos generally regard their former colonisers
warmly. Opinion poll after opinion poll verifies this
assertion. Even after the Bush administration sullied
world opinion of the United States, the Philippines
still regarded it favourably. In a BBC World Service
poll conducted after George W. Bush’s re-election in
2004, 63% of Filipinos viewed his victory as conducive
Figure 1: Net Trust in Selected Countries
80%
United States
60%
40%
Japan
20%
Australia
0%
-20%
China
-40%
1994 1997 2000 2003 2006 2009 2012
Source: Social Weather Stations Second Quarter 2012 Social Weather Report. http://www.sws.org.ph/pr20120813.htm
62
for world peace and security – the most in a sample
of eighteen nations. Pertinently for this discussion,
Philippine opinions of China are not as favourable
and routinely rank well below those expressed for
the United States.
To be sure, the Philippines is heavily influenced by
Chinese culture and history. Historians believe that
Chinese traders have plied their wares in the Philippine
islands since the ninth century, with many subsequently
settling there. Further, it has been led by persons of
mixed Chinese ancestry in current President Benigno
Aquino III as well as his mother, Corazon Aquino.
The Philippine’s national hero, the novelist Jose Rizal,
was likewise a Chinese mestizo. As elsewhere in the
region, Filipino business elites are predominantly of
Chinese heritage. Chinese New Year is even a national
holiday in the Philippines.
Yet, from a foreign policy standpoint, it is remarkable
that China has been unable to translate these historical
influences into something more substantial. Opinion
polls reflect guardedness among Filipinos who are
more likely to distrust than trust China, especially
after 2012’s run-ins at the disputed Scarborough Shoal
which began when a Philippine navy vessel stopped
Chinese fishing boats for allegedly taking endangered
marine species illegally. In other words, the whole
of these influences in winning over Filipino hearts
and minds remains less than the sum of their parts.
US +62 percent
AUS + percent
JAP + percent
NET trust = percent ‘Much trust’
minus ‘Little trust’ correctly
rounded. ‘Don’t Know’
and ‘Refused’ responses
are not shown.
NKorea ■ PRK -34 percent
CHN -36 percent
SECURITY ASPECTS
An enduring stumbling block to closer Filipino-Chinese
relations remains dominion over contested areas
in the South China Sea lying near the Philippines.
Although these areas are within the Philippines’ 200
nautical mile Exclusive Economic Zone (EEZ) and are
outside China’s, the latter makes historical claims for
dominion over them. Illustrating the contentiousness
of this dispute, as a result of the recent incidences
near the Scarborough Shoal, which began in April
of 2012, President Aquino issued an administrative
order renaming the maritime areas of the disputed
Scarborough Shoal and Spratly Islands the ‘West
Philippine Sea.’ Although estimates of their recoverable
energy resources vary, few doubt their potential as
well as their strategic importance for shipping and
fishing. It is with regard to the South China Sea that
China’s charm offensive aimed at its Southeast Asian
neighbours falls short.
China’s military resources outstrip not just those of
its Southeast Asian neighbours contesting islands in
the South China Sea, but all of them put together.
Naturally, China’s diplomatic overtures have had to
address Southeast Asian nations’ concerns that the
PRC may use its overwhelming military advantage to
secure these waters.
Earlier this century, China made noteworthy
conciliations that promised progress towards a durable
resolution to the South China Sea dispute. In 2002, it
signed on to the Declaration on the Conduct of Parties
in the South China Sea (DOC), a ‘21st century-oriented
partnership of good neighbourliness and mutual trust.’
The following year, China became the first country
outside the region to sign ASEAN’s Treaty of Amity and
Cooperation (TAC). Subsequently, however, China has
not been able to build on earlier goodwill. Very limited
progress has been made: ASEAN members attribute
this to Chinese unwillingness to make the DOC a
binding resolution. China could instead agree to take
the matter to the International Court of Justice which
adjudicates territorial disputes, or the International
Tribunal of the Law of the Sea, which handles those
over the interpretation of the UN Convention on the
Law of the Sea (UNCLOS), and which all concerned
have ratified.
Countries in the region believe that China’s
unwillingness to ‘multilateralise’ this dispute despite
the DOC making references to international law in
general - and UNCLOS in particular - stems from
China’s desire to maintain power asymmetries by
dealing with ASEAN members individually instead
of collectively. On their own, ASEAN parties to this
territorial dispute like the Philippines and Vietnam
have limited capabilities in terms of military might or
diplomatic clout. Whether this truly is China’s intention
or not, this ‘divide and conquer’ perception certainly
does not help the tenor of Filipino-Chinese relations.
Conversely, a country which is not a signatory to
UNCLOS – the United States – has been able to take
advantage of Filipino-Chinese differences over the
South China Sea, less through providing material
assistance, but more by means of implicit guarantees.
In 2010 when South China Sea claimant Vietnam
held the rotating ASEAN chairmanship, it raised the
matter at the ASEAN Regional Forum (ARF) meeting.
US Secretary of State Hillary Clinton stoked the flames
of the dispute when she stated that the United States
had a ‘national interest’ in keeping the region’s sea
lanes open for trade. Although China denounced
this action as intervention in a matter the US was not
privy to, the US’s declared stake in the South China
Sea dispute vividly depicted its effort to reengage in
the Asia-Pacific region.
That reengagement, following what Assistant
Secretary of State for East Asian and Pacific Affairs
Kurt Campbell called ‘a middle east detour’ in the
decade following 9/11, builds on historic security
arrangements. Although the US left its Philippine
bases in 1991, the Mutual Defence Treaty of 1951 still
stands. Moreover, the US navy has participated with
various Southeast Asian navies including that of the
Philippines in annual Cooperation Afloat Readiness
and Training (CARAT) exercises as well as the US-
Philippine Balikatan (shoulder to shoulder) exercises.
Pointedly, Balikatan exercises were held this year in
Palawan near the Philippines’ disputed claims with
China. Prior to the Obama administration’s ‘pivot’,
the Philippines’ longstanding difficulties with Muslim
extremists and its measured pace of development
compared to regional peers, meant it was receptive
to assistance through participation in the global war
 on terror. However, the South China Sea imbroglio
has presented the US with a ‘hegemony on the cheap’
option as Southeast Asian claimants seek to hedge
against a noncommittal China.
ECONOMIC ASPECTS
Economically, the Philippines finds itself caught
between China and the US as they compete for its
affections. Unlike in the sociohistorical and security
realms, neither holds a clear advantage. China has
been better able to portray itself as sharing common
ground with the Philippines. Once more, this situation
illustrates the non-fungible nature of differing
geopolitical resources.
Even now, the United States remains the Philippines’
largest trading partner. Generally speaking, this
relationship has been friendly, with a few minor
exceptions such as a recent WTO case the US
successfully brought against the Philippines over
discrimination against imported liquor. US economic
influence in the Philippines is extended via the presence
in Manila of Washington-based lender the World Bank,
as well as the Asian Development Bank, whose largest
shareholder alongside Japan is the United States.
Merchandise trade aside, Philippine service exports
also benefit from American consumers, with the
country’s move to a post-industrial economy heavily
conditioned by the US market. Unbeknownst to many,
the Philippines surpassed India as the world’s call centre
capital in terms of both employees and revenues in
2010. While higher value-added business process
outsourcing (BPO) services remain in India, routine
tasks such as customer service are now handled by
Philippine-based outfits. This growth can be attributed
to an innate hospitality coupled with a grasp of English
– taught from primary school level onwards – and
Filipinos’ familiarity with American culture. In 2010,
eighty percent of Philippine BPO exports went to the
United States.
Nonetheless, questions remain about Philippine
reliance on the United States as an export market.
Not only has the US experienced an economic
crisis that has forced its consumers to retrench, but
American incomes have stagnated since the turn of
64
the new millennium. Despite the US market being by
far the world’s largest and the Philippines’ advantages
exploiting it, diversification remains welcome to
cushion the local economy from shocks emanating
from America.
China presents an interesting economic counterweight.
Collectively, ASEAN is China’s third largest trading
partner after the EU and the US, surpassing Japan in
2011. Conversely, China is ASEAN’s largest trading
partner. Alike with its fellow ASEAN members, China
has amassed a fair amount of goodwill with the
Philippines in the economic realm. Here, China is
better able to portray itself positively as a benign
force interested in South-South cooperation for
development, despite the competition China presents
for a number of Philippine exports, including a number
of light industries involving the manufacture of
garments and textiles.
A watershed event in China’s economic relations with
its near neighbours was the Asian financial crisis of
1997/98. Many crisis-hit nations remain critical of
how the then-prevalent ‘Washington Consensus’
orthodoxy of liberalisation, deregulation and
privatisation was demanded by the US in exchange
for IMF emergency funding. Socioeconomic hardships
attributed to blanket implementation of such policies
made Southeast Asian nations particularly wary of a
repeat. To its credit, China then did not devalue its
currency to remain export-competitive with these
already-suffering nations. That when confronted with
its own crisis America did exactly the opposite via
deliberalisation, reregulation and nationalisation cast
further doubt on American motives.
Aside from moving closer to ASEAN by joining the ARF
and signing the TAC, a further pillar of China’s bid for
influence has been to set up economic mechanisms
to prevent a repeat of the Asian financial crisis and
enmesh China in regional trade. The Chiang Mai
Initiative Multilateralisation (CMIM) establishes a
common pool of emergency funding to deal with
balance of payments issues. Together with Japan,
China has the largest commitment to the fund at
$38.4 billion. Another mechanism is the Asian Bond
Market Initiative (ABMI) that has seen total regional
bond market issuances expand from $196 billion in
1997 to $5.9 trillion in 2012.
The Asian Financial Crisis was in no small part due to
relying too much on capital from outside the region,
when Asia has enormous savings that can be used
for investment. Hence, the emergence of a wider and
deeper regional capital market should benefit not only
the region’s savers but also its entrepreneurs.
The ASEAN-China Free Trade Agreement (ACFTA)
agreed to in 2002 (and which came into effect in 2010)
set ASEAN on a course to sign many more similar trade
deals, including with South Korea, Australia & New
Zealand, and India. ACFTA established a template for
other economic suitors of ASEAN in joining ARF and
signing the TAC before negotiating an FTA, thus linking
security and economic matters. While economists
complain about ‘trade diversion’ effects arising from
multiple FTAs co-existing, the political ramifications
of such deals may be equal to or even outweigh
economic considerations.
The United States’ pivot towards the region has
followed a similar pattern. It only signed the TAC
with ASEAN in 2009. Prior to that, the United States,
in contrast to China and ASEAN’s ACFTA, had had next
to no success in establishing an FTA in the Asia-Pacific.
The Asia-Pacific Economic Cooperation (APEC) has
been its preferred vehicle for launching such initiatives,
but its proposed Early Voluntary Sector Liberalisation
(EVSL) and Free Trade Area of the Asia-Pacific (FTAAP)
have fallen to deaf ears. Despite its various security
arrangements with America, the Philippines has
not necessarily supported US efforts to promote
an APEC-based FTA.
The same holds true at the present time with the much-
hyped Trans-Pacific Partnership (TPP) enlargement
discussions. In a case of ‘if you can’t beat ‘em, join
‘em,’ the United States is seeking to expand an existing
FTA whose membership consists of APEC members
Brunei, China, New Zealand and Singapore. Wary of
being frozen out of regional trade deals, the United
States seeks to use TPP to not only safeguard its
trade preferences (such as strong intellectual property
provisions), but also to create bandwagon effects
to blunt Chinese momentum. Already, American
trade authorities have welcomed the participation
of Australia, Japan, Malaysia, Peru and Vietnam.
The lack of Philippine interest in TPP despite it being
an obvious American vehicle to maintain regional
influence underlines the former’s independent streak
in economic diplomacy.
Along with many other developing members of APEC,
the Philippines has been noticeably keener on technical
assistance for capacity building. Signing on to several
FTAs may be confusing or even detrimental, if the
country in question does not have the institutional
capacity to facilitate trade. Although lacking in
glamour, processes such as improving utilisation rates
of preferential tariffs, automating customs procedures
and identifying countries of origin more readily are
matters requiring attention. Insofar as the US does
not always recognise that trade facilitation precedes
and improves gains from trade liberalisation, it has
had trouble gaining the favour of developing APEC
members like the Philippines.
CONCLUSION
After reviewing the sociohistorical, security and
economic aspects of the regional contest for Philippine
affections between the US and China, it is evident that
no suitor has an outright advantage in all three. As we
have seen, each suitor has its own set of idiosyncrasies
when it comes to approaching this Southeast Asian
nation. While their foreign policies do help shape
Filipino views of the US and China, these policies
alone do not solely shape such views.
On the balance, however, there remains a durable tie
between the Philippines and the United States that
China has yet to approach. In recent years, Chinese
officials have invoked the peaceful voyages of Chinese
explorer Zheng He to parts of the Orient and beyond
in the fifteenth century as a historical example of
goodwill: despite China’s overwhelming economic
and military clout then, the admiral did not colonise
the places he visited, and this example is meant to
soothe present concerns of developing nations of a
once more ascendant Middle Kingdom. Yet, as far as
the Philippines is concerned, the United States has
been more successful in presenting Uncle Sam as a
benevolent uncle than China has in casting Zheng
as a peaceful voyager seeking support from other
shores. Unresolved territorial disputes over the South
65
 China Sea belie this desired image of benevolence
– especially for the Philippines, which has been
attempting to read the tea leaves over PRC policy on
this matter for quite some time.

That senior Chinese officials hint the South China

Sea is a ‘core national interest’, implying that it is
on par with Taiwan and Tibet among PRC territorial
priorities, inspires particular caution given China’s
military might compared to that of its neighbours.
Still, the more jingoistic elements of this claim are
counterbalanced by a need to elicit the support of
others in the neighbourhood. It is here where the
Philippines has attempted to play a better hand by
using ASEAN as a middle power ‘bully pulpit,’ though
again China has been more attuned to negotiating
economic arrangements than security arrangements
with ASEAN.

To the surprise of some, then, the US-Philippine

relationship remains durable even at a time when
the United States is supposedly losing its foothold in
any number of countries and regions. Cultural affinity
and blood ties between both nations run deep. While
the Philippines now has several economic ties with
China, public opinion suggests these are more out of
economic necessity than any real affection. Moreover,
the Philippine economy complements that of the
United States more than it does China’s, given linguistic
differences and that Chinese and Philippine exports
often find themselves in competition in third markets.

In simple terms, the Philippines remains a country

for America to lose and one for China to gain in
the great game of the Asia-Pacific, where each
nation’s endorsement matters in the contest for
regional influence. ■

66
The Pragmatic ‘Little Red Dot’:
Singapore’s US Hedge
Against China
Robyn Klingler Vidra

We are a little red dot but we are a special red dot. We are connected with the
world, we play a special role. And we are not going to be in anybody’s pocket.
- Minister Mentor Lee Kuan Yew, 2009

T he cornerstones of Singaporean foreign policy towards the United States and China are
constituted by security considerations, economic liberalism and a dedication to pragmatic
non-alignment. Above all, pragmatism has led the Singaporean approach to the Eastern and
Western powers. Diplomatically, Singapore aims to be neutral and free from alliances, even
in its close relations with both the US and China. Security-wise, Singapore has called for the
involvement of the US in Asia Pacific across the Cold War and Post-Cold War periods as a hedge
to local regional powers, particularly in light of China’s military modernisation. Access to the
large American consumer market has been considered crucial to Singapore’s economic ‘miracle’
but the American share of trade has declined in recent years as trade with Asian partners, and
particularly with China, has accelerated. Singapore maximises economic opportunities through
growing market ties with China, while avoiding bandwagoning. Singapore hedges its cultural,
spatial and economic proximity to China with robust diplomatic, military and economic relations
with the US and through regional participation in ASEAN and international organisations. By
doing so, Singapore pursues its grand desire to remain uniquely Singaporean.

Singapore punches above its weight. For a state with a mere five million residents and 700 square
kilometres of land, its economic production, security position and political leadership in Southeast Asia
are remarkable. Singapore’s significance is also demonstrated by the time and attention it has received
from great powers, including the US and China. The ‘Little Red Dot’ phrase comes from Former Indonesian
President B.J. Habibie’s remark during the Asian Financial Crisis, claiming that the non-green (i.e. non-
Muslim Malay) state of Singapore was neither a friend nor of significance to him. Months later, Habibie’s
Indonesia faltered and was forced to seek help from the Little Red Dot of Singapore, among others, and
the well-capitalised island nation acquiesced. To assure its own survival, small but significant Singapore has
aided its neighbours when in need – due to financial crisis or natural disaster – regardless of ideological
or cultural differences. Yet it has passionately avoided overly close alliance with, or becoming a ‘satellite’
of, regional great powers, be it the United States, Japan or China.

67
 HISTORY, CULTURE AND DOMESTIC POLITICS
Domestic cultural concerns act as a magnified mirror
for regional concerns vis-à-vis China, Malaysia and
Indonesia in particular, and are increasingly prominent
in Singapore’s foreign policy formulations. From the
time that Sir Stamford Raffles claimed Singapore as a
colonial territory for the British East India Company in
1819, Singapore has been a society of multi-cultural
immigrants. Singaporeans are ethnically Chinese
(74 percent), Malay (13 percent) and Indian (9 percent).
This diverse population shares a turbulent history, from
the end of British colonial rule to the exit of Japanese
occupiers after World War II and separation from
the Malaysian Federation in 1965. From the birth of
the Singaporean state, the predominantly Chinese
political leadership sought policies that would instil
a Singaporean identity, rather than prompt further
racial tensions. To foster multiculturalism, and create
an internationally competitive labour force, English
was chosen as the primary language in the education
system, along with each student also needing to study
in their home language (Mandarin, Tamil or Malay).
Despite the Hokkien background of the Singapore
Chinese, the government adopted a ‘Speak Mandarin’
campaign in 1979 to aid in the country’s global
competitiveness and to capitalise on the opportunities
presented by China. Singapore’s language selection is
Figure 1: Singapore Population growth 1970 - 2010
6,000
5,000
4,000
3,000
2,000
1,000
0
1970 1980 1990
Source: Singapore Department of Statistics
68
telling of its pragmatism and balancing of Chinese
and English markets. Its political leadership thus
ensures economic relevance by having the citizenry
speak English and Mandarin, but maintains Asian
culture and ethnic diversity by retaining Singapore’s
multilingual nature.
In addition to Singapore’s ethnic diversity, there have
also been significant immigration flows to the Lion
City. This phenomenon has recently sparked political
controversy, including the 2011 ‘Curry Wars’,
which began in response to complaints lodged by
a Chinese family about the smell coming from the
flats of their Indian neighbours cooking curries. The
backlash to this anti-curry action ignited protests, as
Indian and Malay residents felt the Chinese majority
was suppressing their culture. This is not the first
time racially-motivated protests have been staged
in Singapore - there were violent race riots in 1964
and 1969. The recent Curry Wars are said to be a
manifestation of the rising frustrations over the
number of Chinese immigrants to Singapore; there
are now more than 1 million Chinese nationals living
in the country. It is not only Chinese immigrants,
however, who have moved to the island. The country
is a melting pot for ex-patriot business professionals.
22 percent of its non-resident immigrants are skilled
workers and professionals – many of whom are
Resident Population
(Citizens and
Permanent residents)
Non-resident
2000 2010
American and European – and foreign workers account
for approximately 37 percent of Singapore’s population
of 5,077,000. Non-residents, including both unskilled
foreign workers and professional expatriates, have
risen from 60,000 in 1960 to 1.3 million by 2010, in
the context of a doubling of the resident population
(see figure 1). The rising population aggravates
existing strains on the provision of resources, and
threatens to intensify cultural tensions in an already-
sensitive multi-cultural environment. Population
growth has exacerbated controversial issues, including
the overheated housing market and concerns over
becoming a Chinese satellite. Despite these tensions,
Prime Minister Lee Hsien Loong’s National Day rally
speech in 2011 reiterated the historic importance of
immigration and foreign talent to Singapore, and he
encouraged his citizens to ‘accept the discomfort’
associated with crowding more people onto the island.
Rising social tensions have been accompanied by a
strengthening critique of the single party leadership by
the People’s Action Party (PAP). PAP ruled Singapore
under Lee Kuan Yew as Prime Minister from 1965
to 1990. The following two Prime Ministers, first
Goh Chok Tong, and then Mr. Lee’s eldest son, Lee
Hsien Loong, who took office in 2004, were also
drawn from the party. The PAP had won between
61 and 86 percent of seats in each election since
independence from Malaysia in 1965. In May, 2011
PAP suffered its worst election result since the state’s
formation, in which it won only 60 percent of the
vote and the Workers’ Party secured five seats, an
outcome that has been dubbed the ‘Singapore Spring’.
Responding to this heightened cynicism, PAP’s political
leadership launched an independent inquiry into their
compensation packages, the result of which was the
well-publicised announcement in January 2012 that
the world’s best paid head of state, Lee Hsien Loong,
would take a 50 percent salary cut. Singapore boasts
one of the world’s least corrupt political systems, which
according to PAP is precisely because they are well
paid and therefore not incentivised to take bribes or
to partake in excessive fundraising activities. In fact,
the World Economic Forum has ranked Singapore the
strongest institutional environment globally due to its
lack of corruption, political stability and high level of
Government transparency. However, even this long-
defended PAP position was chipped away following
the result of the 2011 elections.
Rising cultural and political tensions domestically
continue to necessitate care in foreign policy decisions.
Despite having a Chinese majority, Singapore is neither
bandwagoning with China nor seeking to distance
itself from the People’s Republic, as a neutral policy
is required to avoid sparking further domestic unrest.
Cultural differences have not substantially affected
Singapore’s relationship with the United States, despite
what Minister Mentor Lee Kuan Yew has suggested to
be a substantive difference between Singapore’s Asian
values and those of the US. Singapore, like some of its
ASEAN peers, welcomes the Obama administration’s
‘pivot’ back to the Asia Pacific region, regardless
of domestic political differences. Going forward,
Singapore will continue to tread carefully with its
foreign policy towards China and Muslim states, as
foreign policy toward these states can give rise to
further domestic difficulties.
ECONOMIC DRIVERS
Economic success has long been considered crucial
to the survival of the Singaporean state. One of the
Asian Tigers - and considered an economic miracle by
many- Singapore went from a ‘third world country to
a first world nation’ in one generation, according to
the title of Lee Kuan Yew’s 2000 book. Since 1965
Singapore has balanced single-party leadership and
state intervention in the economy with active global
economic integration. The government has set the
agenda for private sector activities and has also created
industries through state-owned enterprises, such
as the internationally acclaimed Singapore Airlines.
Also central to Singapore’s competitive efforts has
been the courting of multi-national companies that
have brought capital, technology and management
expertise, as well as providing access to foreign markets
and well-paid jobs. Singapore has integrated into fast
growing areas of the world economy, becoming a hub
for semiconductor manufacturing, the busiest port in
the world, and a global financial centre. In addition,
the state itself is well capitalised as a result of policies
such as the mandatory pension contributions to the
69
 Central Provident Fund. Today Singapore boasts one
of the world’s largest official foreign reserves of over
$237 billion, which gives it the financial independence
to pursue non-alignment strategies.
Singapore has deliberately forged close economic
relations with regional, middle and great powers to
achieve its economic goals. Singapore has signed
bilateral free trade agreements (FTAs) with both
China (the CSFTA in 2009) and the US (the USSFTA
in 2004) to continue delivering on this priority. Despite
Singapore’s small size, it is an important partner to
the world’s largest economies. It is the largest trading
partner for China in Southeast Asia, and the 2004
USFTA was the first bilateral trade agreement that
the US signed with any Asian country. Despite robust
trade with the US and China, Singapore’s policymakers
are clear in their desire to not fall into economic
dependence on either partner. Access to both markets
is important, but maintaining trading relationships with
other states, particularly its ASEAN +3 (which includes
Japan and Korea in addition to China) partners, is
similarly pursued. To avoid too large of a concentration,
the share of Singaporean trade with the US and China
has hovered around a maximum of 10 percent each
(see figure 2).
Figure 2: Singapore’s Trade with the US and China as percent of total trade figures
12%
11%
10%
9%
8%
7%
2005 2006 2007 2008 2009 2010 2011
Source: Singapore Department of Statistics
70
In recent years the United States’ percentage share
of Singapore’s total imports and exports decreased,
while Singapore’s share of trade with China has
increased since the Financial Crisis. As of 2011, 70
percent of Singapore’s total trade was with Asian
trading partners and two of its top trading partners
are members of ASEAN (Malaysia and Indonesia).
Singapore’s EU trade in 2011 accounted for just
6.3% of its total trade, while trade with its ASEAN
partners (Brunei Darussalam, Cambodia, Indonesia,
Laos, Malaysia, Myanmar, Philippines, Thailand and
Vietnam) represented 26.3%. Figure 3 demonstrates
the regional economic integration Singapore has
achieved, as well as the positions of the US and China
as key trade partners.
Over the last decade in particular, Singapore, as well
as Hong Kong, has strived to be a hub for foreign
investment into China. The Chinese-speaking island
nations promote their infrastructure, local language
skills and cultural affinity with China as their competitive
advantages. However, fears are that as confidence in
Chinese institutions grows then these advantages will
diminish, with the result that Singapore would lose FDI
as investors deal in China directly. Singapore therefore
sees its strategic relationship with the US as a hedge
China % of Total
US % of Total
against increasing Chinese economic dominance,
and uses its deepening engagement with its ASEAN
partners as another avenue to diversify away from
China economically.
MILITARY AND DIPLOMATIC STRATEGY
Military prowess is important to Singapore, as
demonstrated by its world class Singapore Armed
Forces, military conscription, and relatively high
defence spending. However, it would be wrong to
view Singaporean foreign policy primarily though
a hard power or military security lens. Singapore
maintains a ‘Total Defence Policy’, striving to defend
itself from attacks across economic, military, civil,
social and psychological spheres. For Singapore,
military capability, together with economic success
and social cohesion, is an essential ingredient of its
longevity. The tenets of economic liberalism, along
with an active military deterrent, have been central
to Singapore’s overall strategy, complemented by a
diplomatic independence in foreign policy that in Lee
Kuan Yew’s words has seen the state strive to not be
Figure 3: Singapore’s Top 10 Trading Partners in 2011 (Total Imports & Exports in USD million)
THAILAND
iNDIA 5%
6%
TAIWAN
7%
KOREA
7%
JAPAN
9%
HONGKONG
9%
UNITED
STATES
12%
Source: Singapore Department of Statistics (2012).
‘anti-any country’, but rather only pro-Singapore.
There is an ideological commitment to pragmatism
and impartiality that guides Singaporean military and
diplomatic relations, including its close and complex
interactions with the United States and China.
Singapore’s political leaders have supported the active
role of the United States in the region across the Cold
War and post-Cold War periods, as a ‘hedge’ against
the rise of its neighbours, notably Indonesia and
China. Despite disagreements over democratic and
human rights issues such as freedom of speech and
an independent judiciary, the US-Singapore bilateral
relationship has been close, both diplomatically
and security-wise. Minister Mentor Lee Kuan Yew
and others have long-standing relationships with
American political leaders. As a testament of their
close diplomatic and military ties, since 1999 the
Changi naval port has been used by the American navy,
with approximately 100 ships stopping in Singapore
each year. The expansion of the US-Singapore naval
relationship followed the reduction of the US naval
presence in the Philippines in 1992. However, concerns
MALAYSIA
17%
CHINA
16%
INDONESIA
12%
71
 about US military capacity are bubbling to the surface,
particularly following the January 2012 announcement
that the US would cut approximately $500 billion in
defence spending.
Unlike the long-established US-Singapore relationship,
Sino-Singapore diplomatic relations only began in
1990. In the early years, Singapore and its ASEAN
partners were sceptical of China’s motives and
approached the relationship with apprehension. Today,
however, much of the remaining tension between
Singapore and China relate to Singapore’s relationship
with Taiwan. This issue has not been at the centre
of Sino-Singapore relations since a 2006 PAP visit
to Taipei, though concerns about tensions in the
Taiwan Strait are beginning to resurface. For now,
Chinese diplomatic relations with Singapore continue
to flourish, and in 2010, to mark twenty years of
Sino-Singapore relations, Prime Minister Lee Hsien
Loong met with Chinese Vice President Xi Jinping
and outlined areas for further collaboration. More
robust relations between governments, in information
sharing, and culturally, through exchange programmes,
were specifically mentioned as priority areas in which
China and Singapore could work on to improve their
collaboration in regional and multilateral issues.
Of course, an area that is noticeably absent in
Singapore’s relationship with China is military
collaboration. Singapore’s security relationships
continue to be dominated by the United States
rather than China. This is not unusual for ASEAN
states and others, as China’s ‘peaceful rise’ has not
been accompanied by any notable military alliances.
Instead, China’s military rise has been unilateral, and is
a process that is gaining momentum through China’s
military spending and modernisation efforts. The
further build-up of the largest active army in the world,
with 2.3 million soldiers, has provided the impetus
for increased military spending across Asian states.
Australia, Korea and Indonesia have increased defence
budgets, and Singapore’s defence spending in 2011
was up to $12 billion, which accounts for 6 percent of
GDP. In addition to local increases in military capacity,
the United States’ role as the military balancer has
become even more important in a region increasingly
concerned about China’s rise, territorial claims over
islands, and instability on the Korean peninsula.
72
However, given weakening American military and
economic might, and projections that China’s military
spending may surpass the US by 2035, the power
of the US security hedging role may be diminishing.
Conclusion
Pragmatism is the virtue guiding Singaporean foreign
policymaking. From its days as a new state in the
1960s, keeping the Little Red Dot on the map has
been the priority. Within the domestic context, social
cohesion, conscientious public service, and a first world
quality of life have been avenues through which the
single-party Singaporean government has sought to
achieve stability. Externally, maintaining close and
fruitful relationships with major – as well as minor
and middle –powers has similarly been part of its
Total Defence strategy. Singapore has viewed the rise
of China as an opportunity to be a regional hub for
investment flows and as a driver of economic attention
to the region. However, Singaporeans are adamant
that they will not become a satellite of China, or any
other great power. As a result, whilst Sino-Singapore
relations continue to deepen, Singapore is diversifying
its economic and security interests, particularly through
its encouragement of an American presence in the
South China Sea as a hedge against China’s regional
aspirations. The US-Singapore relationship is long-
established and positive across economic, military, and
diplomatic spheres. Though democratic and cultural
understandings may differ, this has not marred the
overall relationship, and America’s commitment to
Asia, in light of regional tensions and China’s military
rise, has been welcomed by Singapore.
Domestic political and cultural tensions, such as the
Curry Wars in August 2011, and the ‘Singapore
Spring’ election result in May 2011, have shown that
Singapore’s people increasingly want their voices heard
in domestic and foreign policy matters. No longer is it
assumed that PAP knows what is best, and the well-
educated, well-travelled and ambitious populations are
making their opinions known. They want a mutually
beneficial relationship with China, but not an endless
flow of immigrants, or to be overwhelmed by Chinese
culture. Singaporeans want to continue sending their
best and brightest students to the United States for
university, and for the American presence in East Asia
to persist. Despite the increase in domestic cultural
and political activism, young Singaporeans are still
lamenting that Singapore’s future will be characterised
by pragmatic partnerships with states and foreign
corporations in both the West and East.

Despite shifts in external and domestic conditions,

the philosophy guiding Singapore’s foreign policy
strategies, particularly with respect to the US and China,
remains pragmatic. President Obama’s rededication of
American interest to the region confirms the status
quo for Singaporean objectives – of keeping the US
active in Asia as a hedge against rising powers and
as a provider of stability. Singapore continues to grow
ever closer economically, culturally and diplomatically
with China, but the ‘Little Red Dot’ is careful to not
be subsumed by the emerging Asian superpower.
Singapore will remain, just as its well-trodden tourism
slogan boasts, uniquely Singapore. ■

73
 Thailand’s Foreign Policy in
a Regional Great Game
Thitinan Pongsudhirak

A s one of five treaty allies of the United States in East Asia alongside Australia, Japan, the
Philippines, and South Korea, Thailand plays a pivotal role in this fluid region. During
the Cold War, its alliance with the US trumped other hedging considerations, as Bangkok
remained staunchly committed to anti-communism, but since the collapse of the Soviet Union its
relations with Washington have become increasingly prickly, especially on bilateral trade issues
over intellectual property and environmental and labour standards. Concurrently, Bangkok’s
relationship with Beijing has solidified to the extent that of all of the United States’ treaty
allies in the region, Thailand enjoys the closest diplomatic ties with China. While its stock of
multilayered connections with the US remains dense and diverse, especially in military-to-military
aspects, the flow of Thailands relations and contacts is increasingly towards China, forging
the rise of a bloc that might be dubbed ‘CLMT’ (Cambodia, Laos, Myanmar, and Thailand).
These countries are strategically central to what is fast becoming a great game of sorts in
mainland Southeast Asia, in view of Washington’s cultivation of treaty allies and strategic
partnerships around China’s eastern and southern rim as part of its strategy of geopolitical
reinforcement. The contours and dynamics of Thailand’s foreign policy outlook and posture
are thus portentous for the shape and content of geopolitical outcomes in East Asia.

The following analysis addresses the direction of Thai foreign policy in the context of broader dynamics
in mainland Southeast Asia. The upcoming East Asia Summit in Phnom Penh and the relative calm and
stability under the government of Prime Minister Yingluck Shinawatra present a timely occasion for a
forward-looking assessment. Unsurprisingly, the Yingluck government has maintained Thailand’s traditional
focus on concentric circles of foreign relations, focused first and foremost on immediate neighbours next
door, followed by the major powers and the broader regional context. Thailand’s strategy, informed by
Southeast Asia’s fluctuating geopolitical dynamics and elusive regional architecture, reflects its role and
position in the context of an emerging division between mainland and maritime states in the region.

THAILAND’S NEXT-DOOR FOCUS UNDER YINGLUCK

After more than a year in office on an overwhelming electoral mandate, Prime Minister Yingluck has
translated her solid domestic standing into growing international credibility. While the direction of her
government’s foreign policy is still inchoate and tentative, Yingluck’s priority on next-door relationships is
clear. Alongside Myanmar’s political transition and economic reforms, Thailand’s focus on its immediate
neighbours has placed a renewed and unprecedented spotlight on mainland Southeast Asia as an
emerging sub-region in its own right, straddling China and the Indian subcontinent and attracting the
interest of major powers keenly aware of its immense potential and prospects.

74
Yingluck’s first few months in office were largely
written off as her government was consumed with
handling a floods crisis. When Thailand’s worst
deluge in decades subsided by January 2012, the
Yingluck government began to implement its raft of
campaign pledges in earnest. These mainly pandered
to domestic electoral bases, and included a hike in
the daily minimum wage, rice price guarantees, and
rebates for first-time purchases of homes and cars.
While supporters cheered these promises fulfilled,
perennial critics of Yingluck’s brother, former Prime
Minister Thaksin Shinawatra, condemned these and
other ‘populist’ policies as fiscal profligacy. Largely
absent from the cut-and-thrust of Thai politics in
Yingluck’s first year has been foreign relations.
As her domestic agenda went into motion, Yingluck
went abroad more often. Her role in foreign affairs
became prominent because the foreign minister,
Surapong Tovichakchaikul, is seen more as Thaksin’s
trusted lieutenant than Thailand’s chief diplomat.
For the same reason, senior diplomats at Thailand’s
foreign ministry were more salient in setting policy
tone and content. The multifaceted diplomacy of
Yingluck’s foreign policy apparatus set out to restore
key relationships with immediate neighbours,
particularly Cambodia and Myanmar. Yingluck visited
both countries early in her administration, Phnom Penh
in September 2011 and Yangon and Naypyidaw the
following December, and has revisited both countries
since.
Cambodia was Thailand’s most pressing foreign policy
priority. The Preah Vihear Temple controversy erupted
in 2008 under the administration of Samak Sundaravej,
Yingluck’s predecessor and Thaksin’s then-proxy, as
UNESCO World Heritage status for the site revived
a long-standing border dispute. Thai-Cambodian
relations reached a nadir in 2009-11 under the
Democrat Party-led government of Abhisit Vejjajiva.
The anti-Thaksin yellow shirts and Abhisit’s fiery foreign
minister, Kasit Piromya, had been instrumental in
the attack against Samak’s government for allowing
Cambodia’s application to UNESCO. Prime Minister
Hun Sen of Cambodia also contributed to the bilateral
controversy and complications by taking Thaksin’s side.
In 2011, prior to the election, both sides engaged
in military skirmishes in the contested 4.6 square
kilometres land area where Preah Vihear Temple is
located, claiming more than two dozen lives, scores of
injuries, and thousands of displaced bystanders. It was
the worst regional conflict since ASEAN’s formation 45
years ago. Under Yingluck, and thanks to the amity
between Thaksin and Hun Sen, the Thai-Cambodian
front has regained calm and stability. The bilateral
spat has been depoliticised, and military presence on
both sides has been scaled down dramatically. The
next potential flashpoint is the International Court of
Justice’s clarification of its 1962 ruling (which awarded
the temple but not the adjoining land to Cambodia)
expected in the next few months, a case Cambodia
submitted during Abhisit’s tenure. If the contested area
is adjudicated in Cambodia’s favour, the anti-Thaksin
columns are likely to go on the march again. However,
Thailand’s ties with Cambodia appear cordial as long
as the Thaksin camp is ensconced in power.
Thailand’s western border stands in marked contrast.
The Democrat Party-led government did not preside
over bilateral turmoil and mayhem but went along
with Myanmar’s opening and reforms following the
November 2010 elections. That Yingluck’s government
has followed suit and broadened this bilateral
partnership is attributable to Myanmar’s indispensable
role in Thailand’s future economic development.
Relations with Myanmar are remarkably non-partisan
in deeply polarised Thailand, reflecting the degree of
Thai dependence on Myanmar, which runs the gamut
from migrant workers and natural gas imports to
drugs suppression. Yingluck has redoubled Thailand’s
commitment to the multibillion-dollar development of
the Dawei deep sea port megaproject, initially awarded
in 2010 to Italian-Thai Development, a heavyweight in
the Thai construction industry, but in which the Thai
government has effectively assumed a lead role in
project financing, design and development. Irrespective
of Thailand’s colour-coded political divide, whichever
side is in power will recognise Myanmar as Thailand’s
most vital bilateral relationship.
To a lesser extent, Laos and Malaysia are crucial to
Thailand’s foreign policy outlook, but they have not
figured as centrally in recent times as Cambodia
and Myanmar. Laos exports substantial hydropower
to Thailand and is in the process of building the
controversial Xayaburi dam, which is opposed by a
75
 myriad of human rights and environmentalist groups.
The land-locked communist state’s accession to the
World Trade Organisation after 15 years of negotiations
and preparations is likely to spur steady economic
growth over the next decade and diversify its aid,
trade and investment patterns away from China and
Thailand towards the rest of the world. Vientiane’s
WTO accession can be seen as Laos’ ‘coming out’
manoeuvre, designed to address the imperative of
economic development whilst maintaining centralised
rule under its communist party. It is a grand exercise
in ‘having its cake and eating it’, not unlike similar
non-democratic regimes in Hanoi, Beijing and other
residual communist states. Malaysia, engrossed in
its own growing political tensions, has maintained
stable relations with Thailand, and Bangkok appears
in need of Kuala Lumpur’s assistance to resolve the
Malay-Muslim insurgency in its southernmost border
provinces, one of the deadliest internal conflicts in
the world that has claimed more than 5,000 deaths
since January 2004. High-level Malaysian officials have
reportedly offered to be a third-party broker, but such
efforts thus far have not borne the hoped-for fruits
of peace and stability.
THE MAJOR POWERS IN THAILAND’S ORBIT
Among the countries of Southeast Asia, Thailand holds
special and resilient relationships with all of the region’s
major powers . While its neighbours have had difficult
relations in the recent or distant past with either China
or Japan, Thailand has long been counted as a valued
partner by both Beijing and Tokyo, even as it remains
a formal ally of the United States. It is these strong
relationships with major powers in the constellation of
regional relations that Thai policymakers are trying to
leverage and harness for Thailand’s role and standing
on the global stage in the months ahead.
The formal alliance with the US is the most conspicuous.
Bangkok signed on to the Manila Pact in 1954, which
established the Southeast Asia Treaty Organisation
(SEATO) – effectively a precursor to ASEAN. The
alliance was cemented by a joint communiqué
between the two countries in 1962 as the Cold War
intensified. Established almost 180 years ago, Thai-US
relations reached their contemporary apex in June
76
2003 when former Prime Minister Thaksin Shinawatra
visited former President George W. Bush at the White
House and returned with a package of reciprocal
benefits. Thaksin enticed the Bush administration to
start negotiations for a bilateral free-trade agreement,
and Thailand was given ‘major non-NATO ally’ (MNNA)
status in exchange for sending Thai troops (mainly
in support areas of medicine and engineering) to
assist in both US-led wars in Afghanistan and Iraq.
Thailand also signed on to the Container Security
Initiative, a programme intended to increase security
for maritime cargo shipped to the United States, and
provided exemptions for US personnel in legal cases
involving the International Criminal Court. Not since
the Cold War, in which Thai soldiers fought alongside
American GIs in Korea and South Vietnam, had the
Thai-US relationship been so significant.
After a military coup ousted Thaksin in September
2006, partly owing to the bilateral trade negotiations
that skirted around civil society scrutiny, Thai-
US relations increasingly drifted, held hostage by
Thailand’s domestic political volatility and turmoil.
The Americans have tried during the post-coup period
to ‘revitalise’ this bilateral alliance, one of its five
major bilateral treaty spokes in East Asia, in both
Track I and II endeavours, but thus far to no avail, as
neither side sees much urgency in this process. The
Thai government is content to avoid the political
controversy closer ties with US would likely generate
domestically, and American policymakers are yet to
coalesce around a shared diagnosis of the problem
to underpin their strategic diplomacy. The Thai-US
alliance is certainly not what it used to be, and appears
in need of a complete revamp after more than two
post-Cold War decades.
China has greater freedom in formulating bilateral
ties than the US, unhindered by the input-output
bottom lines and accountability requirements that
constrain the Americans, and as a result the Chinese
have deftly fostered close ties with Bangkok. Thai-
Chinese relations have warmed to levels unseen since
the anti-Vietnam years when Thailand was ASEAN’s
frontline state in a standoff against the Hanoi-backed
Heng Samrin regime in Phnom Penh, a united front
that included the Beijing-supported Khmer Rouge.
While Thai-Chinese ties have never been estranged
since their normalisation and Bangkok’s adoption
of a one-China policy in the mid-1970s, this subtle
but deepening bilateral partnership is reinforced by
the role of the overseas Chinese, who have become
economically integrated and ethnically seamless
entrepreneurs in Thailand’s economic development.
As China’s economic rise becomes the defining feature
of regional politics in the 21st century, Thailand’s natural
omnidirectional hedging between the major powers
has augured well for the Bangkok-Beijing axis. China
was the only major power to recognise Thailand’s
putsch in 2006 and allowed high-level contacts with
coup-appointed government officials. Military ties
have deepened in recent years, as the Chinese have
sponsored more Thai middle-ranking military officers
for training in China than ever, and the two countries
have undertaken joint military exercises every year
since 2003. Indeed, in 2007 Thailand was the first
Southeast Asian country to host the People’s Liberation
Army on its territory.
Similar claims can be made for the unprecedented
number of Thai students receiving scholarship
opportunities to study in China. More Confucius
institutes dot the Thai landscape than in any other
Southeast Asian country. China also provides
sanctuaries and mobility for Thaksin and a frequent
home for Thailand’s Crown Princess Maha Chakri
Sirindhorn. Much of the recent deepening in Thai-
Sino ties builds on the late 1990s when Thailand’s
most devastating economic crisis in decades was
met with Chinese goodwill, aid and loans, while
the US Treasury stood by in favour of a painful IMF
bailout package. For the Chinese, their interests in
Thailand are about open-ended relationship-building
for long-term strategic gains rather than short-term
convertible benefits. Irrespective of how Thailand’s
domestic political instability plays out, the Chinese will
likely end up on the winning side. Such a long-term
view is enabled by the continuity afforded by long
periods of stable Chinese leadership and a top-down
authoritarian system that can decide and operate
on long-range planning. As a result, a new ‘CLMT’
grouping appears in formation among Cambodia,
Laos, Myanmar, and Thailand. The acronym used to
be ‘CLMV’, which included Vietnam and denoted new
ASEAN members in the 2000s. CLMT, on the other
hand, refers to the mainland-based sub-region that
is increasingly under China’s influence.
To be sure, the US also went along with the Thai
coup in its own way, notwithstanding its pro-
democracy rhetoric and automatic suspension of
IMET (International Military Education and Training
program), as WikiLeaks cables have revealed. But
ironically Washington has not reaped the same credit.
As a telling example, Thaksin’s visit to the US in August
2012 elicited howls of protest and a demonstration
in front of the US embassy in Bangkok, whereas
his regular appearances in China and Hong Kong
were treated as par for the course in Thailand. The
request by the US’ National Aeronautics and Space
Administration to conduct a joint study of climate
change with its Thai counterparts, which was viewed
by anti-Thaksin elements with suspicion, had to be
cancelled in June 2012. Thailand has veered towards
Beijing for understandable reasons of shared heritage,
as well as strategic hedging and geopolitical interest,
but its relative drift from Washington is a conundrum.
Revitalising Thai-US relations first and foremost
requires an admission and a prognosis of this drift.
Insisting and pretending otherwise, as US officials and
diplomats have inclined, is likely to favour Beijing at
Washington’s expense. It would be beneficial neither
to Washington nor Bangkok, which aspires for a
balanced footing among the major powers.
Beyond China and the US, Thailand’s true and
fortuitous friend is Japan. When the region was
ravaged by the Second World War, the characteristic
disunity of Thai leaders enabled Bangkok to end up
officially on Japan’s losing side. Unlike their regional
peers, Thais harbour no latent ill will from the 1940s
towards the Japanese, and the Japanese know and
respect that. Bangkok is their longstanding economic
springboard, a regional headquarter of choice that
suits and caters to Japan’s interests and preferences.
Recent China-Japan tensions have caused a rethink
among Japanese companies and small- and medium-
sized enterprises, and more of them are likely to
diversify away from China towards Southeast Asia and
Thailand in particular for its production and industrial
support networks.
77
 In recent years, other major powers with less historic
ties to the region have made growing forays into
Southeast Asia. India’s two decades of ‘Look East’
policy has made only limited progress, and the huge
recent power outage in India has brought India’s
broader strategic wherewithal into doubt. Nevertheless
Thailand has always been close to India on the people-
to-people Track III basis. India provides the roots of
Thai culture, language, and religion. Thousands of Thai
students have been boarding in the Indian foothills
for decades, even when New Delhi was more insular
and its economy leant towards socialism. As the ‘new’
Japan, South Korea’s impressive rise as an OECD
country with growing ‘middle power’ status, soft
power projections such as the regionally popular Dae
Jang Geum television series, and the viral Gangnum
Style on youtube videos, bodes well for Thailand.
Unlike China and Japan, South Korea is an East Asian
country where ordinary Thai passport holders do not
need a visa to visit, thanks to Thailand’s wartime
contribution in the early 1950s. Seoul in the northeast
of the region and Bangkok in the southeast form
an ideal geographical partnership of like-minded
countries with similar backgrounds. More can be
made of Thailand’s promising ties with other rising
regional middle powers such as Australia, which views
Thailand as the most important ASEAN member after
Indonesia. Even Russia, a new member of the East
Asia Summit, enjoys a special friendship with Thailand
dating to the late 19th century when Siam (as Thailand
was known until 1939) was in search of powerful
European friends to counterbalance European
imperialism, particularly France’s territorial ambition.
As for the European Union, Thailand can count on
strong partnerships in trade and investment with key
European countries, including Germany, the United
Kingdom and the Netherlands. Even the long history
of enmity with France does not engender lasting
bitterness among Thais.
Thai leaders are currently cognisant of this optimal
and unrivalled mix of major powers relations in
Thailand’s orbit. But Thailand’s international problem
is its domestic politics. Until its existential domestic
conflict is resolved, Bangkok is likely to underachieve
and underwhelm despite its past profile and future
potential as an up-and-coming middle power in
mainland Southeast Asia.
78
MAINLAND, MARITIME AND REGIONALISED
SOUTHEAST ASIA
Thailand’s focus on its next-door neighbours and
the dynamics and contours of its near abroad and
farther afield enables a different lens with which to
view regionalism. ASEAN is Southeast Asia’s regional
organisation, and Asia’s most durable. It has succeeded
in preventing interstate wars from within since its
founding in 1967. ASEAN has reached the pinnacle
of its integration efforts in its attempt to forge an
ASEAN Community by the end of 2015, resting
on the three pillars of ASEAN Political and Security
Community (APSC), ASEAN Economic Community
(AEC) and ASEAN Socio-Cultural Community (ASCC).
The blueprints of these plans are ambitious, and
ASEAN is expected to need to relaunch its Community
objectives, but the organisation is likely to be able to
maintain its momentum. Owing to historical mistrust
in East Asia, the ten-member organisation has proved
its staying power as a steer and steward of regional
cooperative vehicles, spanning Asia-Pacific Economic
Cooperation, the ASEAN Regional Forum, the ASEAN
Plus Three, the East Asia Summit, and, more recently,
the ASEAN Defence Ministers’ Meetings Plus.
But the region of Southeast Asia is moving ahead
in the face of regionalist rhetoric and aspirations.
Maritime Southeast Asia features states that have
locked horns with China over territorial claims in
the South China Sea. The Philippines and Vietnam
are at the forefront, with Malaysia, Indonesia and
Brunei in support, vis-à-vis China. The South China
Sea has thus become an arena of tension and conflict,
inviting the US as a countervailing superpower to
check Beijing’s assertiveness, especially in view of the
Obama administration’s declared Asian ‘pivot’ and its
broader geopolitical rebalancing strategy. The interests
and concerns of maritime Southeast Asian states are
divergent from the CLMT, which were either silent
or supportive of Cambodia’s pro-China stance at the
annual regional ministerial meeting in Phnom Penh
in July 2012, when ASEAN failed to produce a joint
statement due to the insistence of the Philippines and
Vietnam on including language on the South China
Sea disputes.
On the other hand, mainland Southeast Asia’s CLMT
is growing as a sub-regional market of more than 200
million consumers, when southern China is included.
Mainland Southeast Asia, which connects Northeast,
South and Southeast Asia and more than 3 billion
people in all, has thus entered an unprecedented
period of promise and expectation, revolving around
Myanmar’s nascent transformation under the
leadership of President Thein Sein and opposition
leader Aung San Suu Kyi, and Thailand’s restored next-
door ties. The ongoing development of infrastructure
on the mainland is increasingly connecting land routes
in all directions, east-west and north-south. Borders
erected during colonial times matter decreasingly as
the flows and movements of goods, peoples, trade,
and investment allow development trends to criss-
cross the area. It is a sub-region being courted, as
in the Central Asian great game of the 19th century,
by China as the regional superpower and the United
States with its staying power as an extra-regional
hegemon, with Japan heavily invested, and India
as a civilisational cradle. Yet for all the economic
opportunity sensed by the major powers, contestation
cannot be ruled out, particularly in the Mekong where
potential dam developments may give rise to issues
of energy security. Myanmar may be where China
meets India, but Myanmar-Thailand forms the strategic
corridor that could pivot and mould the shape of things
to come on the mainland, with broader repercussions
for the entire Asian landmass.

It appears that maritime Southeast Asia is increasingly

leaning towards Washington, whereas mainland
Southeast Asia, led by Thailand, is more influenced
by Beijing. Regional discussions and meetings on peace
and stability should focus on the ever-elusive and
contested regional architecture. A working regional
framework must rely on the China-US relationship. If
China can step back on its South China Sea claims and
the US can reassure Beijing of its benign rebalance,
both maritime and mainland states in Southeast Asia
would have more common interests under the ASEAN
umbrella, which can act as a bridge and linchpin of
regional security and stability. ■

79
 Conclusion

80
Forging a Regional Strategy
Munir Majid

I t was to be expected that international politics in Southeast Asia would change with the
greater weight of participation of extra-regional powers. However, the speed with which
that change has taken place, barely two years after the American pivot and Beijing’s greater
assertiveness in the South China Sea, has taken many by surprise. The dynamics of the new
geopolitics of Southeast have undoubtedly driven a deterioration in regional order, as the
pressures and inducements of the superpowers incentivise bilateral dealmaking over multilateral
arrangements. Whether a new system of order needs to be constructed, or the present
architecture needs to be repaired and augmented, is a matter regional states urgently need
to address – and will only be able to do so effectively along with those extra-regional powers.

States in Southeast Asia have historically tended to regard economic development as a panacea. Yet the
new challenges presented by the emerging distribution of power in the region demand changes in the
way regional states approach the task of order-building. Up to now, Southeast Asia’s strategy has largely
been ASEAN-based. Whilst the ‘ASEAN way’ of managing regional order has often been criticised, the
organisation has achieved much in the last 45 years.1 The ‘ASEAN way’ has served its time well, building
on mutual confidence, working on the basis of consensus, and proceeding at the pace of its slowest
member. In the present impatience with ASEAN it is often forgotten how far the region had to come
since the 1960s. Then, Indonesia’s confrontation of Malaysia had just ended. Singapore and Malaysia had
split in acrimony after two ill-fated years of federation. The Philippines had been pursuing its claim on
the Malaysian state of Sabah. Only Thailand – the founding meeting in 1967 was held in Bangkok – did
not have an immediate dispute with its neighbours, although the Vietnam War was raging next door.
ASEAN was an historic initiative for peace and stability, led by towering regional statesmen. Even so,
the meeting almost broke up without a joint communiqué over differences on the wording with respect
to foreign military presence in the region, but the leaders knew one another well and appreciated the
importance of the enterprise they were embarked on.

Over the last 45 years, much has been achieved, particularly in the economic field, and especially on
trade. The membership has expanded from the original five to the present ten. The inclusion of the
continental states of Cambodia, Laos, Vietnam and Myanmar in the 1990s was particularly significant
for broader regional integration. Whilst the move represented a risk to cooperation by widening the
social, political, economic and foreign policy differences within the grouping, there was a wisdom to it
in preventing the periphery from threatening the core. The cost was a two-speed ASEAN, but one that
nevertheless remained well accommodated, particularly in the economic field. The ASEAN approach of
inclusion rather than isolation was for many affirmed by Myanmar’s 2010 rehabilitation, although, of
course, there were more significant domestic factors that moved Naypyidaw. Still, membership of the
regional grouping had served to avoid animosity between Myanmar and ASEAN, and allowed it some
influence with the regime.

1 For a broad overview of such critiques, see Nick Bisley, Building Asia’s Security, Routledge for International Institute for International Affairs, 2009,
London. The contemporary dimensions of those arguments were reflected in Divided We Stagger, The Economist, August 18, 2012.

81
 However, with the region and the world changing so
fast around it, ASEAN’s incremental and consensual
approach is unable to provide pro-active leadership.
ASEAN states have avoided the construction of an
encompassing order for regional peace and stability
because there might not be a consensus for such a
grand bargain. So Southeast Asia has kept ASEAN as
it is. Ostentatious plans for integration, with target
dates, were accompanied by a ready understanding
that if they could not be achieved without a change
in ASEAN’s structure, then as long as there was some
progress towards them that would suffice. As intra
and then extra-ASEAN cooperative arrangements
grew, new layers of dizzying arrangements were put
in place without detailed enumeration of how those
arrangements were to function and to relate to one
another. The only structural commentary was the
oft-repeated wish the ASEAN platform would be the
basis of any new regional super-structure. But can
the ‘ASEAN way’ survive the increased involvement
of extra-regional powers in the Southeast Asia? The
East Asia Summit (EAS) – and the expansion of its
membership – could not be explained as simply the
expansion of the ‘ASEAN way’ with other states. Some
of those states dwarfed ASEAN, and had objectives
that were obviously incongruous with the regional
grouping – despite the repeated mantra of using
ASEAN as the platform. That platform is now creaking
and could give way. Unless ASEAN states work to
repair the foundations of their condominium, they
risk drifting into a new system of regional alliances
based on classic balance of power.
ASEAN’S STRUGGLES
When, on the 13 of July this year, ASEAN foreign
th
ministers could not agree on a communique at the
end of their meeting in Phnom Penh, for the first time
in the organisation’s history, it was described first as a
disaster. Then as a dent to the organisation’s credibility.
Later still, a setback. Finally, it became commonplace
to claim that different perspectives on the South China
Sea dispute do not on their own define what ASEAN
is about. ASEAN is in denial. At a time when the new
geopolitics of Southeast Asia are being formed around
it, such an attitude is dangerous, because the issues of
power politics and instability grow more pronounced
while the organisation is divided.
82
In the wake of the Phnom Penh meeting, relations
between two member states, Cambodia and the
Philippines, have deteriorated. There have been
accusations and counter-accusations of who was
responsible for the communique not coming out,
and of the Cambodian ambassador being summoned
to the foreign ministry in Manila but not turning up,
and finally being recalled home, souring ASEAN’s
45th anniversary celebrations in August this year.
One senior Cambodian official wryly noted that the
communique debacle showed that ASEAN has reached
maturity, implying that it has now to face up to the
reality of the differences within the grouping. On
the South China Sea, most commentators see two
camps – with Cambodia, Laos and Myanmar siding
with China against the other seven, who believe
the most recent incidents involving China with the
Philippines and Vietnam should at least be mentioned
by ASEAN. It would be more accurate to point to a
floating middle of states that feel that the Philippines
was over-emotional about the Scarborough Shoal
incident and behaved outrageously in accusing the
Cambodians of switching off the microphone as its
Secretary of Foreign Affairs Albert del Rosario was
pressing the issue. Meanwhile, true to the ASEAN way
of seeking to avoid discomfort, Malaysia feted Chinese
foreign minister Yang Jiechi during his official visit in
August with a dinner party involving 20,000 of his
counterpart’s constituents for Iftar (the breaking of fast
during Ramadan). Yang Jiechi’s long-promised official
visit also included Brunei and Indonesia. Beijing wanted
to declare to the world that its relations with ASEAN
were as good as ever, and Yang Jiechi said as much.
If ASEAN is not completely at sixes and sevens, it is
certainly not particularly united. Before the latest round
of South China Sea incidents this year, a majority of
ASEAN member states had encouraged Hillary Clinton
to make the statement she did at the ARF meeting
in Hanoi. After China was put on notice – and the
Chinese foreign minister was particularly angry with
Singapore at that meeting – diplomatic developments
largely put China on the defensive. Whoever was
responsible for causing the recent incidents, and there
are those within ASEAN and without who point fingers
at member countries, it is clear there is no effective
regional mechanism to address them. It is left to the
ASEAN disputant with China, with the US expected to
act as insurance in a worst case scenario, though without any clear indication of where the American tipping
point lies. ASEAN has made little progress on conflict prevention, let alone dispute resolution. The South
China Sea disputes have become a moving reflection of the strategic contest between China and the US in
Southeast Asia, a dynamic which does not wait on the passive acquiescence of the ASEAN way.

Even as ASEAN members sought to engage American interest in the South China Sea disputes they were not
clear on what exactly it was they wanted. They clearly sought an American counterweight to balance China,
but have been unable to clarify in their own minds whether that counterweight should be used to constrain,
deter or contain China. Each of these – or all of them – entails a diplomacy and regional arrangement quite
different from what ASEAN is equipped to do. It is therefore left to each member state to fend for itself,
with the dominant strategy being to hedge between the superpowers. Thus, during a visit to Washington
in February this year the Singapore foreign minister said the US should be careful not to make China feel a
containment strategy was being targeted against it, even as Singapore encouraged the US to be more active in
Southeast Asia. This week of diplomacy in the US was followed by a three-day visit to China, with whom the
island state has strong economic relations. Since these meetings, Singapore has expanded its agreement for
US naval facilities in the city-state – apparently without affecting its very significant economic ties with China.
Malaysia enjoys the best of relations with both China and the US, in a way the Philippines does not. Cambodia
seeks to avoid turning its back on America even as it embraces, or is embraced by, China. Myanmar now
looks forward to greater American economic engagement but whilst augmenting its ties with neighbouring
China, although it appears not to remember the combined ASEAN contribution that in the past ensured that
Naypyidaw was not totally isolated. Thailand has a military treaty arrangement with the US, but does not seek
to antagonise China. Vietnam is the most exposed to China, historically, geographically and politically, but is
taking a steady approach in seeking security and military support from the Americans. The smaller member
states, such as Brunei and Laos, do not have much room to hedge, especially the latter which because of its
location falls under China’s sphere of influence. Even hedging, if not adroitly conducted, could develop into
playing both ends against the middle, and in either case, if regional conflict is not contained or resolved, its
outbreak would put ASEAN states between a rock and a hard place.

THE NEED FOR REGIONAL LEADERSHIP

Only Indonesia has the capacity and inclination to play a regional diplomatic role in the new geopolitics of
Southeast Asia. As the Phnom Penh foreign ministers meeting broke up in acrimony, Indonesia’s President
Susilo Bambang Yudhoyono despatched his Foreign Minister Marty Natalegawa on an ASEAN diplomatic
mission to restore a veneer of unity. His effort was successful in salvaging six points of agreement, although
the Cambodians maintained those points had always been there in the communique the Philippines had
not agreed to in Phnom Penh.2 Clearly, the damage has been done and it will take more than a diplomatic
papering over of the cracks to repair. Indonesia’s diplomatic efforts are continuing, in an ‘informal diplomacy’
endorsed by the Chinese foreign minister during his Jakarta visit in August.

However, there are serious challenges ahead. The Indonesians did an admirable job as chair of ASEAN in 2011,
leading the development of guidelines to the Declaration on the Conduct of Parties in the South China Sea
(DOC, 2002) and working with ASEAN on the elusive code of conduct (COC). China has stated its support for
the DOC, but is less enthusiastic about the COC, although it has not ruled it out altogether. This reflects its
preference for the disputes to be addressed bilaterally, as well as its aversion to any kind of multilateral legal
commitment to constrain its freedom of action in what Beijing regards as a matter of sovereign right. Indonesia
continued to work on the COC with ASEAN members at this year’s UN General Assembly. There is now what
2 The six-points still did not mention China directly, but made clear references to the declaration on conduct, its guidelines, the code of conduct, restraint
and non-use of force and peaceful resolution in accordance with international law and UNCLOS.

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 the Indonesians call a ‘zero-draft’ COC, a formulation clearly designed to placate Chinese sensitivities. Senior
ASEAN officials met Chinese policymakers in Pattaya, Thailand at the end of October to move towards realising
the COC, but China continues to prefer to concentrate on the non-legalistic and less specific DOC. The test
will be what happens at the November ASEAN summit and the other meetings with extra-regional powers that
follow. The ASEAN summit must address the South China Sea disputes substantively, rather than attempting
to compensate for a lack of progress with a wordy expression of progress in all other aspirational areas that
is often typical of ASEAN. Leadership transition in China and a new Obama administration in the US are an
added complication. So as not to return to square one, the Indonesian effort should be given institutional
blessing by ASEAN leaders to elevate it above the status of ‘informal diplomacy’. In the medium term, there
will also be a new Indonesian President in 2014, and the capable Marty may not remain as Foreign Minister.
With so many imponderables, there is all the more reason for ASEAN to get its act together.

Thus, the least the ASEAN leaders summit should aim to achieve is to give official support to the Indonesian-
led diplomatic effort. If the leaders do not support it, the likelihood is that ASEAN will be at the margins
of regional diplomacy as the strategic contest between China and the US is played out. The possibility that
Indonesia may go-it-alone in its pursuit of ‘dynamic equilibrium’ also cannot be ruled out.3 Indonesia has
offered the leadership that ASEAN needs, the kind that led to the formation of ASEAN in 1967. The Malaysian
foreign minister Anifah Aman did suggest after meeting his Chinese counterpart that it would be useful
if ASEAN states resolved the disputes among themselves first before they approached China to solve the
disputes with Beijing. This is a tall order, particularly while the Malaysians themselves are understandably
preoccupied with their domestic politics in the lead up to elections. The claims overlap and cannot all be
resolved without affecting China whose nine-dash line alone could claim 80 percent of the South China Sea
if it is not properly defined. The broad issues of international law that need to be clarified have been generally
well covered by Robert Beckman, but even so they need to be more comprehensively broadened to include
rights and conflicts which may need to be resolved on the basis of equity under Article 59 of UNCLOS and to
drive joint development based on the idea of the common heritage of mankind.4 A regional communitarian
approach, led by ASEAN after taking into account all legal and equitable considerations, would be of great
benefit, and certainly preferable to the prevailing general statements which stagger dispute resolution efforts
in an unsustainable way.

Malaysia in particular could bring to the table the salient features of its successful understanding with Thailand
in 1979 on a joint development area, one of the first applications of the principle of joint development in
territorial disputes in the world. More broadly, Malaysia could use the goodwill stemming from its excellent
relations with China to provide joint leadership in an ASEAN engagement of China to address the South
China Sea disputes in a cooperative manner.5 Singapore appears to have decided to take a back seat now that
Indonesia has taken the lead, but can be engaged to become more active once there is a joint ASEAN effort.
After all, Tommy Koh, Singapore’s Ambassador-at-Large, was chairman of the law of the sea conference which
originally and arduously negotiated UNCLOS. Thailand has internal political problems to which it gives first
attention, but has always been proud that ASEAN was founded in Bangkok. Its professional foreign ministry
will be able to see the threat to ASEAN of non-action, as well as the positives from the Gulf of Thailand joint
development area with Malaysia. The Philippines may be sulking and brooding but, as Indonesian foreign
minister Marty has shown, they can be cajoled. The passage of time does not only cause uncertainty that
exacerbates instabilities in the South China Sea, but also could result in ASEAN losing its relevance to the
regional order. The irony then would be that ASEAN failed not because it did not have the assets to play an
effective role, but because it failed to exercise leadership at the time of greatest need.

3 The concept has its antecedents in 1948 during Vice-President Mohammad Hatta’s time: Mendayung antara dua karang (Rowing between two reefs).
4 Robert Beckman, The South China Sea Disputes: How States can clarify their maritime claims, RSIS Commentaries No. 140/2012 July 2012
5 For a well-documented analysis see Kwik Cheng-Chwee, Malaysia’s China Policy in the Post-Mahathir Era: A Neoclassical realist Explanation, RSIS Working
Paper No. 244 dated 30 July 2012

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The founder member states of ASEAN have a responsibility to exercise that leadership as the new geopolitics
of Southeast Asia takes shape, just as they did at the end of Indonesia’s confrontation of Malaysia and in the
midst of the Vietnam War. In the past, the ASEAN model has been useful in avoiding conflict and enabling
a concentration on economic development. In the midst of the new strategic contest between China and
the US, if ASEAN continues to proceed in the old way Southeast Asian states may be drawn into conflict.
Even with respect to economic development, there are challenges ahead, not only in terms of ensuring an
internally fair distribution of benefits, but also more immediately from the structural problems of a slowing
world economy – including in China – and which themselves have political and security ramifications. 6 With the
more immediate threat of conflict in the South China Sea, extra-regional states are already involved, making
the repetition of the mantra of ASEAN centrality and the ASEAN way nothing more than wishful thinking.

EXTRA-REGIONAL PRESSURES

When the EAS was expanded to 18 in Bali in November last year, the membership of the US marked a formal
recognition of America’s regional role, if not quite an endorsement of the pivot. With US re-engagement in
the region and the strategic contest with China joined, it is unlikely that either of them will give primacy to
ASEAN in the calculation of their interests and decisions they make to protect or project those interests –
however much they claim to be committed to ASEAN’s centrality in the region. As an economic entity, ASEAN
did indeed constitute the platform for China’s engagement with the region, particularly since 1997, and the
US today wants similar engagement for shared prosperity, but there is no denying that they are far more
powerful in all senses than ASEAN, even if it was united, could ever be. Other states from beyond the region,
such as Russia, India and Australia, have also become participants in the crowded East Asian space, primarily
through membership of the EAS, but mostly by pushing forward their interests, whether in conjunction with
the US or not. It would be too clichéd to say that either ASEAN hangs together or it will hang separately.
What is more likely is that without repositioning itself by taking into account the new geopolitics in the
region, ASEAN will certainly lose its centrality and, increasingly, its relevance. Individual member nations will
then have to fend for themselves as singular states in a highly contested regional order.

Over the past couple of years, the American pivot has caused a major change in the geopolitics of Southeast
Asia by proclaiming the United States’ strategic interest in the region and challenging China’s developing
dominance of it. Whether or not the US ever really ‘left’ the region, the fact that there was some debate in
Washington over whether the right term to use was ‘rebalance’ or ‘re-engagement’ only serves to underline
the new strategic situation. The pivot, while by no means comprehensive, addresses the issues of America’s
role, engagement and strategic objectives – it is a reassertion of the United States’ right to primary regional
space and a confirmation that the US is not about to withdraw to a position of sub-primacy in the international
system. American statements and actions since 2010 show the new emphasis and engagement with the
region, and a willingness to challenge Beijing on a number of issues, especially pertaining to the South China
Sea, and to contest China’s growing influence over Southeast Asia, powered primarily by its economic rise.
America is offering trade, investment and technology for shared prosperity across the Pacific, underpinned
by the security of a new commitment of its naval forces.

This newly contested geopolitics is not to China’s liking. Beijing criticises America’s muscular re-engagement
with the region as intrusive and destabilising. Its reactions have been unsteady and somewhat inconsistent,
ranging from anger at what happened at the ARF meeting in Hanoi in July 2010, to a calm absorption of
what was happening all around it at the EAS meeting in Bali in November 2011, to a strong stand on the

6 Some predict a great world economic crash precipitated by a hard economic landing in China. For an interesting perspective on the potential bursting of
China’s credit bubble see Merryn Somerset Webb, The caustic Soda Connection, FT Weekend Saturday July 28/ Sunday July 29 2012.

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 disputes in the South China Sea from April 2012, culminating in the division that was driven in ASEAN. The
response to any American reaction to any Chinese action with respect to its South China Sea claims is sharp
and shrill, and reminiscent of China’s many ‘serious warnings’ issued to the US for America’s responsive naval
movements as Beijing shelled Taiwan’s Quemoy island in the 1960s (the difference being that China is much
more powerful now, both economically and militarily). Today, China’s domestic politics – Bo Xilai’s sacking
and the ire of his supporters in particular – may have played a part in forming its assertive and unyielding
posture, so as not to be exposed to any charge of not securing Chinese sovereignty in the South China Sea,
but it has also to be noted that China always takes an uncompromising stand on sovereign ‘core interests.’7
In respect of maritime territorial disputes whether in Northeast or Southeast Asia, China has been quite
consistent, even if there is sometimes afforded a margin for cooperation.

Moreover, the question of whether or not South China Sea disputes escalate into a significant conflict will not
be determined solely by the actions of China and the US. Southeast Asian claimant states could provoke or be
provoked into incidents that could precipitate a more serious crisis. Vietnam and the Philippines in particular
have been most involved in incidents with the Chinese over disputed islands and waters in the past couple
of years, in keeping with a trend established in the 1970s. Although a recent comprehensive assessment
concludes there is not a high risk of major conflict, there remains a serious danger of miscalculation, by China,
by regional disputant states, and by the US.8 Indeed, the danger of Beijing miscalculating has been heightened
by the American pivot, which arouses a new sense of threat perception by the Chinese who fear isolation and
containment. The United States’ renewed strategic commitment to the region may also encourage Southeast
Asian claimant states to be adventurous, which could push at the limits of the still undefined circumstances
for US military intervention. Assuming interference with freedom of navigation is a clear cause for such
intervention, it has to be recognised such interference may not be the intended consequence of one state’s
actions, but rather the indirect result of a bilateral conflict between China and a regional claimant state. With
increased military build-up such a conflagration becomes more likely, particularly if the prevailing climate of
aggravation is sustained in the absence of progress towards an agreed solution.

Under such circumstances, how might American naval and air forces intervene, and with what calculated
prospect of escalation? Apart from America’s stated interest in freedom of navigation, the US has also proclaimed
its support for the peaceful settlement of disputes. What does this mean? If it means the United States will
not tolerate the use of force in the pursuit of the disputes, how much and what level of use of force would
cause US intervention, and to what end? Would, for example, the new American engagement with the region
permit the kind of conflict and outcome that took place in 1974 and 1988, when China defeated Vietnam
in sea battles and established de facto control over the disputed Paracels? In this regard, China’s actions in
July this year in establishing an administrative and military presence in the Paracels to command the whole
of its claimed expanse in the South China Sea can certainly be interpreted as a signal to Washington and the
region of where Beijing will draw the line.

The muted American response to that assertion of China’s sovereignty, and Beijing’s fierce rhetorical assaults
against even the slightest criticism of it, may not put an end to the maritime disputes. But China’s de facto
control of the Paracels and its threat of resistance by force will certainly make others – whether claimant
states or extra-regional powers – more circumspect. In a broader strategic context, extra-regional states such
as Australia and possibly India could become involved in an arc of alliances led by the US (together with
American treaty partners in the region such as Thailand and the Philippines). However, the remit of such
extra-regional powers is likely to be to simply hold the line, ensuring freedom of navigation is not interfered
with whilst avoiding involvement in any fracas that may take place between claimant states and China.
7 The massive anti-Japanese demonstrations across China in August this year over the Diaoyu/Senkuku island dispute may have been orchestrated to reduce
attention on the commuted death sentence on Bo Xilai’s wife for the murder of a British businessman.
8 See International Crisis Group, Stirring up the South China Sea (II): Regional Responses, Asia Report No 229 – 24 July 2012. For the likelihood and dilemmas
of US conflict with China across a spectrum of issues, and how best to avoid it see James Dobbins, War With China, Survival, August-September 2012.

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Of course, if there is outbreak of hostilities with heavy fire and casualties, that might be a different matter.
China, possessed with superior military power vis-à-vis the claimants, will know there is a limit, but exactly
where it lies is not so clear. The danger of miscalculation is thus a serious threat to regional stability.

In such a situation of no-war no-peace in the South China Sea, the extensive exploitation of the rich mineral
resources that are the prime cause of the claims and disputes is unlikely, except perhaps by China. Fishing
will of course continue, and minor skirmishes are likely to continue to occur short of force, as one side or
the other invokes the depletion of fisheries to justify arresting fishermen. Add to all this the vagaries of Sino-
American relations in so many other areas, and the calls of their respective domestic constituencies, and it
is clear that the geopolitics in the region are far from the situation Southeast Asian states want as they seek
to further the processes of regional economic development begun when they set up ASEAN 45 years ago.

BEYOND ASEAN

While the ASEAN objective of a region free of major power politics has always been something of a chimera,
it had – in a characteristically ASEAN fashion – been vaguely achieved. However, the American pivot, in
establishing the bounds of the strategic contest between China and the US in and over the region, has changed
things. ASEAN states are involved, both in the general contest and in actual dispute in the South China Sea.
But ASEAN, which has been effectively divided by the geopolitical pressures, risks becoming less relevant and
increasingly marginalised. The ASEAN way – expressing karaoke-comfort and consensually progressing areas
of evidently common good like trade and economic development whilst avoiding difficult problems – is no
longer sustainable when extra-regional powers have raised the stakes and conflict is staring the region in
the face. ASEAN has to develop effective conflict resolution mechanisms, a focussed functional scheme to
engender more cooperative relations in the South China Sea, and some semblance of a strategy in the new
geopolitical environment.

ASEAN sets great store by the Treaty of Amity and Cooperation (TAC, 1976) which contracting parties have
to accede to before becoming members of the East Asia Summit. It refers to a Kantian ‘perpetual peace’ but,
more substantively, Chapter IV of the treaty makes provisions for the pacific settlement of disputes. Both China
and the US acceded to the TAC before becoming members of the EAS, and both repeatedly profess their
commitment to ASEAN centrality. While there is the usual opt-out clause that does not preclude states not
directly party to disputes from offering their assistance, and notwithstanding the reality that procedures for
pacific settlement in other multilateral agreements like the UN Charter often are disregarded, ASEAN might do
well to remind China and the US of their TAC regional obligations in Southeast Asia.9 More importantly – and
urgently – ASEAN should engage China on the basis of Chapter IV with respect to the South China Sea disputes.
Indeed it could form the basis, other than the DOC of 2002, for negotiations towards the much-aspired COC.

ASEAN’s relationship with China has been good, especially around the strong economic ties forged in the past
two decades, and should not be allowed to go to waste because of recent events. At the November 2011
ASEAN-China summit in Bali, before the downward turn of events this year, Beijing offered a $472 million
fund for maritime cooperation in the South China Sea. Joint exploration and exploitation of resources in the
South China Sea, based on the demonstrable benefit of so much economic cooperation that has already taken
place, is far from naive idealism. ASEAN needs to get together to think through the relationship with China
and the problems in the South China Sea, in short, to engage with the new geopolitics of Southeast Asia. This
will involve concentrated effort that is focused, detailed and specific. It will also require a recommitment of
ASEAN unity, if regional states are to avoid divide and rule by China, or the US for that matter. But if ASEAN

9 Article 16 reads ‘…this shall not preclude the other High Contracting Parties not party to the dispute from offering all possible assistance to settle the said
dispute. Parties to the said dispute should be well disposed towards such offers of assistance.’

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 commits to the regional problematic, it can incentivise individual member states, particularly those that have
especially good relations with China, to expend some of that goodwill in the pursuit of the regional interest.

The trouble with ASEAN is that it has developed too many habits of a lifetime, and as officials scurry from one
interminable meeting to the other, many question whether it is capable of changing in step with the regional
political realities. Indeed, the whole ASEAN effort is now in absolute need of reassessment and new strategic
thinking, tasks that require renewed leadership. Specifically, it will be necessary to reorganise the ASEAN
secretariat to serve and support strategic ASEAN interests, led by a Secretary-General who is recognised and
supported in fulfilling, perhaps for the first time, the role envisioned under Article 11 of the ASEAN Charter.
The next Secretary-General will be Vietnamese. While there may be sensitivities in the context of present
regional problems, it will be as good a time as any to revitalise the role of the Secretary-General and the
secretariat. The summit meetings in Phnom Penh this November are critical. While it will be a great surprise
if the outcomes are wide-ranging and substantive, it is crucial that they are positive and, very importantly,
that there is a substantive agenda for ASEAN to develop the strategy for the organisation’s future.

The Indonesian effort to foster the long sought-after COC, while showing leadership and urgency, is still
narrowly focussed on a matter long overdue, and does not represent a fundamental reappraisal of ASEAN’s
role and effectiveness in regional political-security affairs. The ASEAN tendency to kick the ball into the long
grass of the ARF, the ASEAN+3 and the EAS will only show up ASEAN disunity when a true consensus is
not sought and forged on regional political-security affairs. The ‘ASEAN platform’ that is often spoken of,
and which these extra regional groupings represent, is increasingly sat on by heavily endowed states from
outside the region, and in the absence of ASEAN states committing institutional weight to the organisation
it will be ridden roughshod over. Having community targets for 2015, including of political-security, is all
well and good, but will be too little and too late when extra-regional rivalry and interests are impinging on
Southeast Asia now.

While regional and other states may be able to have influence over particular issues and in some contexts, and
ASEAN – if united – has the capacity to bring significant diplomatic weight to bear, the future of Southeast
Asia hangs on how the world’s most important bilateral relationship is managed. A trust deficit exists
between China and the United States. There are historical presumptions, present unease and fears about
the future. In Chinese historical perspective, China is a returning power with the semblance of a restoration
while the Americans feel they are a rebalancing superpower who never left the region. In the conduct of
their relations, China has tended to be aggrieved and self-righteous. The US, on the other hand, have this
sense of exceptionalism that often jars. All this can cause relations in the strategic contest to be framed by
two different senses of entitlement that are already fraught with the tension between a rising contemporary
power and a unipolar power in relative decline. Moreover, China and the United States have to manage their
relationship in the present in a situation where they are economically massively interdependent – a reality
which neither likes but from which neither can escape.

In Southeast Asia their strategic contest is taking form in a hinterland and over an expanse of sea closer to
China than to the US. This makes the Chinese nervous, and has precipitated some rather unsteady although
assertive actions in the key strategic area of contest – the South China Sea. It is possible China could lose
from this the goodwill of the positive economic relationships established with the region, particularly since
1997. Chinese reassessment of the situation is as much a necessary next move as regional engagement with
China to restore the status quo ante.

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Thus China would appear to be on the defensive. However, any American over-commitment in the region
which does not recognise the change and development that have taken place in the region, in particular the
extensive economic relations regional states have established with China, since the United States was last
involved, would be resented. The US is not the predominant economic power it was in the past; there has
been a failure of American financial and economic management that has coincided with China’s successful
economic rise. Therefore any US inclination to over-promise may not obtain ready regional acceptance. The
American approach in the region will need to be more nuanced and balanced than it was in the past. The
relationship with China, on which so much hangs, will be watched in the region to see if the US pivot is truly
a policy of engagement of the region as opposed to the containment of China, which China perceives and
has so far over-reacted to. Within the region, the US would err if it was only interested in taking advantage
of China’s mistakes rather than showing itself to rise above the pressures of geopolitics to play its proclaimed
role to achieve peace, stability and prosperity in Southeast Asia.

The United States’ posture will be crucial to determining how the nations of the region respond to the new
geopolitics of Southeast Asia, but the United States can no longer determine the future of the region on its
own. Southeast Asian states need to establish a third pole in the emerging balance of power by rediscovering
the potential of regionalism. Only a reformed and renewed ASEAN, with the authority and capacity to
mitigate the strategic contest between China and the US in the region, can enable Southeast Asia to forge
a Southeast Asian future. ■

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 STRATEGIC UPDATES

In this research report IDEAS explores the current euro crisis by

looking at the debates preceding the conception of the euro.
How can the early days of EU monetary cooperation help us
understand today’s predicament? And what lessons can we
draw from them for the euro?

Emmanuel Mourlon-Druol was the Pinto Post-Doctoral Fellow

at LSE IDEAS for the 2010-2011 academic year.

This essay is a revised version of an address to the General

Assembly of the United Nations, to mark the International
Day of Non-Violence, observed every year on Mahatma
Gandhi’s birthday, 2nd October.

Ramachandra Guha is a Senior Fellow at LSE IDEAS.

The signing of Anglo-French Defence Treaty has been one

of the least reported, and analysed, of the UK coalitions
Government’s policies, whilst being, without question, one of
its most significant. In the context of defence cuts on both sides
of the Atlantic and the Channel, and of a Libyan operation in
which Britain and France’s dependence on American assets
surprised some observers in Washington, this paper assesses
the consequences of the Treaty for Anglo-French defence
cooperation.

John Stevens is a Visiting Fellow at LSE IDEAS.

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 SPECIALREPORTS

Since 1909 the international community has worked to eradicate the

abuse of narcotics. A century on, the efforts are widely acknowledged to
have failed, and worse, have spurred black market violence and human
rights abuses. How did this drug control system arise, why has it proven
so durable in the face of failure, and is there hope for reform?

The economic and political position of Europe in the world is changing,

particularly its relationships with China and the United States. The Eurozone
crisis represents a strategic opportunity for Europe to rethink itself and
become a more powerful united force.

The report, Europe in an Asian Century, explores how China looms large in
Europe’s recovery from the crisis and is increasingly interested in Europe’s
future for economic and wider strategic reasons. And as the US increasingly
focuses on Asia, Europe is impelled to carve a role for itself beyond the
old certainties of the transatlantic relationship. Europe therefore has a
pivotal strategic opportunity to capitalise on these shifts in global power
to lay claim to the same key status as China and the US. However, the UK’s
obstructionism will prevent Europe from achieving this.

As the world continues to experience the fallout from the 2008 financial
crisis, it is increasingly turning towards China. The outsourced ‘workshop
of the world’ has become the world’s great hope for growth, and the
source of the capital the West’s indebted economies so desperately need.
Simultaneously, and in the United States in particular, commentators
and policymakers have increasingly voiced concerns that the economic
clout of a communist superpower might pose a threat to the liberal
world order. These contradictory impulses – China as opportunity and
China as threat – demonstrate one clear truth, exhibited in the Obama
administration’s much-trailed ‘Asian pivot’: that China is important.

It is in this context that this report attempts to provide a systematic

assessment of the economic bases of China’s foreign policy and the
challenges the country faces as it makes the transition from rising power
to superpower. In doing so, it is informed by a central question, of to
what extent China’s remarkable growth has given rise to a geoeconomic
strategy for China’s future.
international
affairs

diplomacy

strategy